Jeepney Drivers Call for Price Rollback as Oil Giants Reap Profits

Mainstream media reported how the recent transport strike fizzled out but failed to analyze the reasons behind the protest action. As a result, the continued profiteering of oil companies becomes hidden in technical jargon and misleading statistics fed by both government officials and oil executives.

BY DANILO ARAÑA ARAO
Bulatlat.com

Mainstream media had a field day exposing the failure of the nationwide transport strike last Oct. 30 to paralyze traffic in key cities of the country. Government officials were quoted as saying that the strike only lasted four hours and was “hardly felt by commuters.”

The Pinagkaisang Samahan ng mga Tsuper at Operators Nationwide (PISTON, United Association of Drivers and Operators Nationwide) organized the strike to call for an oil price rollback. PISTON argues that the income of drivers is severely affected by the successive oil price hikes.

Data from the Department of Energy (DoE) show that for the first nine months of 2002, pump prices increased by P1.60 ($0.0301, based on an exchange rate of P53.075 per U.S. dollar) per liter on the average. It may be recalled that there was a reported oil price hike of P0.38 ($0.0072) per liter in early October. This translates to a cumulative increase since January 2002 of P1.98 ($0.0373) per liter.

Industrialist Raul Concepcion, head of the Consumer and Oil Price Watch, says that another P0.22 ($0.0041) per liter increase is in the offing due to the fluctuation of the peso-dollar exchange rate and the imminent U.S. war on Iraq that jacked up prices of crude oil in the international market.

Losses in 2001, 2002 offset by profiteering in 2000

The price of Dubai crude was pegged at $18.48 per barrel in Jan. 2002. This increased to $26.61 per barrel in Sept. 2002, a 44 percent increase from the January level. As regards the peso-dollar exchange rate, the Jan. 2002 and Sept. 2002 levels were P51.39 and P52.07 per U.S. dollar, respectively.

Analyzing the data since the year 2000, however, the losses of oil companies in 2001 and the first nine months of 2002 due to fluctuations in Dubai crude prices and the unstable exchange rate are greatly offset by the substantial profiteering in 2000. Given this, Bulatlat.com argued for a rollback in oil prices amounting to P0.30 ($0.0056) per liter. [For more details read “OPH in October: Oil Price Hocus-Pocus,” Bulatlat.com, 2 (34). URL https://www.bulatlat.com/news/2-34/2-34danny.html]

Substantial profits since 1991

Data from the Securities and Exchange Commission (SEC) show that except for 1997 and 2000, oil giants Petron Corporation, Pilipinas Shell and Caltex Philippines have earned profits since 1991, ranging from P0.5 billion or $9.4206 million (Shell, 1992) to P7.5 billion or $141.3095 million (Petron, 1994).

From 1991 to 2001, Petron, Shell and Caltex earned a cumulative combined income of P41.4 billion ($780.0283 million). (See Table)

Last year, the big three oil companies made it to the country’s top 10 companies in terms of consolidated sales. Shell was in third place with P96.1 billion ($1.8 billion) in sales, while Petron and Caltex landed fourth (P88.1 billion or $1.7 billion) and eighth (P58.3 billion or $1.1 billion), respectively

Based on media reports, Petron already earned a net income of P1.2 billion from January to June 2002. This means that it has already equaled in just the first half of this year the total net income last year.

Arroyo administration’s tolerance

That the Arroyo administration tolerates the continued profiteering of oil companies is not surprising. After all, it substantially earns from the specific taxes on petroleum products which average P1.58 ($0.0298) per liter.

On the assumption that Filipinos consume 60 million liters per day, the administration earns P94.8 million ($1.7862 million) daily from specific taxes. In one year, this translates to P34.6 billion ($651.9454 million).

The specific tax for diesel, commonly used by jeepney drivers, is P1.65 ($0.0311) per liter. A driver therefore who consumes 20 liters for his or her daily route ends up giving P33 ($0.6218) to the administration in just one day. Assuming that the driver works from Monday to Friday, he or she pays a specific tax amounting to P726 ($13.6788) monthly (i.e., assuming a 22-day workmonth).

The driver may not be aware of such payment since specific taxes are indirect taxes included in the prices of commodities bought (in this case, petroleum products).

Such a situation makes the Arroyo administration tolerate the profiteering ways of oil companies. After all, if the latter are happy, then the administration becomes also happy, if not happier.

The administration cannot afford to let the oil firms lose money since this may compromise the collection of specific taxes. Indeed, the downstream oil industry serves as a milking cow of the Arroyo administration.

This is the reason why the administration is “soft” on rich oil companies but “hard” on poor drivers, as may be gleaned from the pronouncement that those who joined the recent nationwide transport strike will have their franchises cancelled.

Poor people are now going through an oily ordeal, and a cursory look at the downstream oil industry leads one to realize the oily conspiracy between oil companies and the Arroyo administration. Bulatlat.com

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