Bill Repealing Oil Deregulation Gains Ground

Since 1996 when the oil industry was deregulated, there have been 63 oil price hikes - and as many transport protest strikes. This year alone there have been at least eight price increases. A bill is up in Congress to put a stop to the oil price hikes.

BY ALEXANDER MARTIN REMOLLINO
Bulatlat

When committee hearings on House Bill No. 1065 start, Filipinos may see a new alliance of legislators come into being.

HB 1065 - filed last July 1 by Anakpawis (Toiling Masses) Reps. Crispin Beltran and Rafael Mariano; Bayan Muna (People First) Reps. Satur Ocampo, Teddy Casiño, and Joel Virador; and Gabriela Women’s Party Rep. Liza Maza - seeks to repeal the Oil Deregulation Law of 1998.

Having only two sections, it may well be the shortest bill on record. It seeks to repeal Republic Act (RA) 8479 or the “Downstream Oil Deregulation Act of 1998.”

Pointing to what they call the adverse effects of oil deregulation, cause-oriented groups have long been calling for the 1998 oil deregulation act’s scrapping and the nationalization of the Philippine oil industry. The authors of HB 1065, principally labor leader and former cab driver Beltran, seek to do their part in advancing a similar call within the halls of Congress.

There have been 63 oil price hikes since 1998 and as many transport protest strikes. This year alone there have been at least eight price increases.

To gather support for the bill, its authors are planning to also initiate an alliance with their fellow representatives. "The alliance will be called Kongresista Kontra Kartel (K3 or Congressmen Against Cartels)," Beltran said told Bulatlat in a phone interview Aug. 21.

The acronym is a play on the name of the administration camp's coalition, the K4 Coalition, which ran in the May election.

"As of now," Beltran added, "we have not yet gathered co-sponsorship for the bill aside from that from our colleagues in the allied party-list groups…But we will go about campaigning for the bill among our fellow representatives once committee hearings start."

Explanatory note

The bill does not come without the standard explanatory note. And while HB 1065 may be the shortest bill on record, it surely makes one of the most comprehensive cases for any piece of legislation.

The explanatory note, in making its argument against the deregulation of the downstream oil industry, cites research by the independent socio-economic think tank IBON Foundation on oil companies’ overpricing of their products.

In a statement early this year, IBON disclosed that the oil companies had overpriced their products by P0.91 ($0.01625 based on a $1:P56 exchange rate). The statement also explained that based on the rule of thumb for the downstream oil industry, a $1 movement in Dubai crude oil prices should affect Philippine oil prices by P0.26 ($0.0046), while a $1 foreign exchange adjustment should affect Philippine oil prices by P0.13 ($0.0023).

It also cites a March 7, 2004 report by the Cordillera-based Nordis Weekly, an alternative media service, revealing that the production cost of crude oil is P84 ($1.50) per barrel but it is sold in the world market for P1,624-1,680 ($29-30) per barrel. The same report says that oil companies sell about 380,000 barrels of oil each day - fetching them daily profits of P585.2 million-606.48 million ($1.045 million-1.083 million).

The Nordis figures underscore the fact that there has long been overpricing even in the international oil market. IBON has also noted in a more recent statement that oil is not justly priced in the world market.

The explanation correctly notes that: “For all these super profits, however, the oil companies continue imposing relentless oil price hikes, clearly abusing the already abusive nature of the deregulation policy in the oil industry.”

“When the downstream oil industry was deregulated,” the explanatory note reads, “the big oil companies, Petron, Shell and Caltex virtually became a cartel, manipulating and overpricing gasoline and other petroleum products in the market, to the detriment of the public. Their agenda in pushing for frequent price increases can be summed up in two words: more profit. These companies justify unbearable oil price increases by alleging the landed cost of imported crude oil and the weakening of the peso.”

The explanatory note also takes issue with the government claim that oil deregulation would bring in more competition and ultimately lower the prices of petroleum products.

“The entry of new oil players in the oil industry exacerbated the situation,” it reads.  “There are now more players with similar interest to totally control all phases of the downstream oil industry, from the business of importing, exporting, re-exporting, shipping, transporting, processing, refining, storing, and distributing to marketing crude oil and petroleum products. Landed cost of crude oil for each of the players in the industry tends to vary, resulting to (sic) volatile prices of oil products.”

“In short, oil deregulation only worsened problems in the oil industry and further victimized consumers and the economy,” the note then declares.

The note then goes into a detailed discourse on the nationalization of the oil industry, citing a paper written last June by Bulatlat’s Danilo Araña Arao - whose thesis for his MA in Philippine Studies was about the downstream Philippine oil industry. It concludes by reiterating its call for a junking of the Oil Deregulation Law.

Alliance

The authors of HB 1065, in planning to forge an alliance with their colleagues in support of the bill, draw inspiration from the Alliance of Legislators against Regressive Taxes (Alert), initiated by Bayan Muna representatives. A resolution opposing the new tax measures proposed by the Gloria Maca-agal-Arroyo administration, introduced by the initiators of Alert, has managed to garner more than 60 signatures in support of it - about half of these from the administration party, including staunch Macapagal-Arroyo allies Juan Miguel Zubiri and Prospero Pichay.

Do HB 1065's authors expect the bill to be as popular as the anti-tax resolution appears to be?

"We certainly hope so, although we don't count on it too much since the call it makes is quite drastic - the nationalization of the oil industry," Beltran says. "But we are confident that the people, who have been campaigning against oil deregulation in the streets, can prod their elected representatives to support the bill." Bulatlat

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