Bu-lat-lat (boo-lat-lat) verb: to search, probe, investigate, inquire; to unearth facts
Volume 3, Number 3 February 16 -22, 2003 Quezon City, Philippines
Looming U.S. War on Iraq:
Arroyo administration is doing all it can to ensure adequate supply of oil in
the country due to the impending U.S. war on Iraq. At least that’s what the
Department of Energy (DOE) claims.
DANILO ARAÑA ARAO
Secretary Vincent Perez said last Feb. 14 that the country has 70 days of oil
supply inventory, better than Thailand’s 50 days. He assured the public that
the country has enough oil stocks in case the U.S. war against Iraq breaks out.
October Last year, President Gloria Macapagal-Arroyo signed Executive Order 134
which required oil companies to set a minimum oil inventory. The administration
had been forced to issue this order since Republic Act (RA) No. 8479 (Downstream
Oil Deregulation Act of 1998) does not require oil companies to have a minimum
inventory, unlike the previous oil deregulation law in 1996 (RA 8180).
added that countries like “Indonesia, Saudi Arabia, Russia, Iran and other
Middle East countries, will provide the Philippines as much oil as the country
needs, in case a Middle East war erupts.”
to him, the other immediate measures in a war scenario are the maximization of
national storage capacity for stockpiling of diesel and other products,
extension of the Pandacan, Manila oil depot business permit, activation of the
Energy Contingency Task Force that will implement contingency plans according to
scenario level, and implementation of a communication plan such as TV
advertisements that recently came out about how to conserve oil.
regards prices of petroleum products, Perez said that the Department of Energy (DoE)
will closely monitor oil prices, “regularly publishing latest prices and
encouraging consumers to exercise power of choice, continuing dialogues with
transport groups and petroleum dealers, and providing other measures to avert
possible transport fare hikes.”
about oil price hikes?
has apparently left out one important detail --- i.e., ensuring stability of
prices of petroleum products due to the rising prices of crude oil in the
international market. After all, what good is availability of products if these
are not affordable in the first place?
the same day Perez talked to the press, Singapore-based The
Straits Times reported that crude oil prices already hit a 28-month high, as
Brent crude surged to $33.05 per barrel in the futures market. The report
stressed that this happened “after the US said its inventories were at the
lowest since 1975 - with enough to meet daily consumption for just two weeks.”
administration already rejected calls to suspend the imposition of specific
taxes on petroleum products, arguing that this will reduce government revenues
and consequently increase the already ballooning budget deficit.
to RA 8184 (Oil Tax Restructuring Law), the specific taxes per liter are as
follows: Premium gas, P5.35 or $0.09 (based on exchange rate of P53.935 per US
dollar); Unleaded, P4.35 or $0.08; Regular gas, P4.80 or $0.09; Diesel, P1.65 or
$0.03; Kerosene, P0.60 or $0.01; and Fuel Oil, P0.30 or $0.01.
to say, a suspension of these taxes would not only stabilize prices but may also
result in a substantial rollback of prices of petroleum products.
like its predecessors, the Arroyo administration has continually ignored the
issue of overpricing. In fact, energy officials are wont to justify price
increases the past few months, citing the reality in world crude prices.
Dubai crude increased to $27.81 per barrel as of January this year compared to
$18.48 per barrel during the same month last year. This represents a 50.5% in
just 12 months.
January 2000 and 2001, Dubai crude per barrel was pegged at $23.36 and $22.85,
January levels of the peso per U.S. dollar exchange rates stood at P40.39
(2000), P50.93 (2001), P51.39 (2002) and P54.20 (2003).
the other hand, prices per liter of petroleum products from January 2000 to
January 2003 increased by P8.48 or $0.16 (premium); P8.15 or $0.15 (unleaded);
P8.87 or $0.16 (regular); P11.03 or $0.20 (AV Turbo); P9.82 or $0.18 (kerosene);
P9.00 or $0.17 (diesel); P8.58 or $0.16 (fuel oil); and P4.85 or $0.09 (LPG).
actual movements in pump prices in relation to the fluctuations in Dubai crude
prices and the peso-dollar exchange rate, oil firms overpriced their products by
as much as P0.31 ($0.01) per liter. (See Table 1)
on an independent computation, the overpricing of P2.64 ($0.05) per liter in
2000 more than offset the underpricing of oil companies in the following years.
computation is based on the prevailing rule of thumb from 2000 to 2002, with the
latter data used as basis for analyzing the price fluctuation during the first
month of 2003.
on the average Dubai crude price and exchange rate in 2002, a $1 per barrel
increase or decrease in crude oil translates to a corresponding P0.42 ($0.01)
per liter adjustment in pump prices. On the other hand, a P1 ($0.02) adjustment
in the exchange rate results in a P0.20 ($0.004) increase (in case of
devaluation) or decrease (in case of appreciation). (See Table 2)
oil price hikes in the offing
Arroyo administration indeed fails to address the fundamental problem in the
downstream oil industry which persists even prior to 9/11 and the subsequent
U.S. wars of aggression.
A spate of oil price hikes await the country as oil firms once more find a convenient excuse to engage in profiteering, still tolerated by the administration that continues to claim that deregulation is good for the country. Bulatlat.com