Deregulated Fares Loom in the Wake of Oil
The call to nationalize
not only aims to protect the downstream oil sector. It also helps stem the
tide of deregulation, liberalization and privatization of related economic
sectors like transportation.
BY DANILO ARAÑA ARAO
Deregulated land transportation fares, anyone?
The deregulation of
the downstream oil industry will not only result in continued increase in
the prices of petroleum products. Changes in the land transportation
sector are bound to happen in line with the government’s thrust to
liberalize, deregulate and privatize.
Though expected to
raise the bar of protests from various sectors, the deregulation of land
transportation fares looms in the horizon as the Macapagal-Arroyo
administration and the oil companies slowly acclimatize the people to
fluctuations in prices of petroleum products.
As consumers slowly
get accustomed to frequent adjustments in oil prices, the administration
hopes that they would also get used to concomitant adjustments in
transportation fares. The situation is a logical step towards promoting
free competition in the goods and services in the domestic market.
In the context of
land transportation, the administration assumes that free competition will
result in lower prices and better services for the riding public and that
a market-driven pricing scheme will work for the interests of the people
in the long run. Reminiscent of its arguments in favor of downstream oil
deregulation, one may expect the administration to echo such lines when
the time comes for road transportation fares to be deregulated.
sector has been slowly opened up to local and foreign investors in recent
In the early 1990s,
the fares of air-conditioned buses plying provincial routes were
deregulated. By 1992, a partial deregulation of shipping rates (except for
third-class passenger and cargo freights) happened and this was expanded
by then President Fidel Ramos in 1994 through Executive Order No. 213. In
1995, Ramos issued EO 219 which served as an official policy statement on
liberalization of the airline industry, resulting in the entry of more
industry players and the deregulation of airline fares.
fares of jeepneys, tricycles and other cheaper modes of road
transportation are still regulated, it will just be a matter of time
before they are also deregulated just like the case of provincial
Even the franchises
of land transportation will also be opened up to foreign investors in the
near future. The government’s thrust to open up the services sector, after
all, is enshrined in its commitment to multilateral agreements, mainly the
General Agreement on Trade in Services (GATS) which requires signatories
like the Philippines, among others, to provide national treatment to
foreign investors in the services sector. In other words, foreign
investors should be accorded the same rights and privileges as their local
Urgency to nationalize downstream oil industry
The call to
nationalize therefore not only seeks to protect the downstream oil
industry. It also helps stem the tide of deregulation, liberalization and
privatization of related economic sectors like transportation.
It is important to
take heed of the warning signs and to join the growing protest not only
against oil price increases but, more importantly, the continued
deregulation of the downstream oil industry. Bulatlat
Editor’s Note: Danilo
A. Arao acts as national spokesperson of Kontra Kartel, a broad alliance
against oil price increases and the cartelization of the oil industry.
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