Deregulated Fares Loom in the Wake of Oil Deregulation

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
Bulatlat

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.

The transportation sector has been slowly opened up to local and foreign investors in recent years.

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.

While transportation 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 air-conditioned buses.

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 counterparts.

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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