Amid staggered oil price hikes
Groups Demand P2 Rollback, Repeal of Oil Deregulation Law

Those who are for or against oil deregulation use the same set of data but they have come up with diametrically opposed conclusions. The oil companies and the government claim the inevitability of oil price hikes, while cause-oriented groups stress that there is more than enough basis for a rollback and a repeal of the oil deregulation law.

BY RONALD B. ESCANLAR
Bulatlat

Oil companies claimed that due to increased prices of crude oil, an oil price hike by as much as P2.50 ($0.05, based on an exchange rate of P54.13 per U.S. dollar) per liter is inevitable. The government has apparently thrown in the towel and has only asked oil companies to implement the hikes on a staggered basis (i.e., P0.50 or $0.01 per liter weekly).

As of March 10, Dubai crude oil reached an average of $44.13 per barrel. In February, it averaged $39.87 per barrel. On the other hand, the foreign exchange rate closed at P54.13 per U.S. dollar as of March 11, a new 20-month high.

Dubai crude oil is a benchmark in analyzing fluctuations in world crude prices which, along with the foreign exchange rate, provide the bases for adjustments in the pump prices of petroleum products.

On the surface, there seems to be a factual basis for the claims of oil companies, buttressed by the warning of the Department of Energy (DoE) that there would be “more frequent pump price increases due to the soaring costs of crude and refined petroleum products in the world market.”

Not surprisingly, oil companies increased pump prices of diesel, gasoline, and kerosene by P0.50 ($0.01) per liter over the weekend.

Calls for rollback

Various cause-oriented groups, however, have called for a rollback in the pump prices of petroleum products due to the overpricing of oil companies in the past.

IBON Foundation, an independent research think-tank, stressed that oil prices can be rolled back by as much as P2 ($0.04) per liter.

An IBON study revealed that oil companies earned P6.2 billion ($114.54 million) in additional profits last year by overpricing their petroleum products by P3.97 ($0.07) per liter.

From January to December 2004, IBON said that that the average price of oil products was increased by P5.65 ($0.10) per liter. Considering the fluctuations in Dubai crude prices and the foreign exchange rate during that period, the adjustment should have been only P1.68 per liter ($0.03). The additional profit of P6.2 billion ($114.54 million) was based on the average sales of petroleum products of 52 million liters daily.

Since the oil deregulation law (RA 8479) is under review, IBON called on Malacañang to implement a moratorium on oil price hikes, and to rollback prices by P2 ($0.04) to offset a portion of what oil firms owe the public.

IBON also said that the DoE should also consider the repeal of RA 8479 instead of just making amendments to the latter. The review should be used to introduce reforms, like a centralized procurement system of imported oil, and mechanisms for regulating pump prices, the group said.

Biased review panel?

A five-person review panel formed by outgoing Energy Secretary Vincent Perez was given three months to hold consultations among stakeholders and to make
recommendations. The panel is composed of Carlos Alindada, former commissioner of the Energy Regulatory Commission and also former chair of accounting firm Sycip, Gorres, and Velayo; Peter Lee U, dean of the College of Economics of the University of Asia and the Pacific; Alberto Suansing, secretary general of the Confederation of Land Transportation Organization of the Philippines; Merceditas Garcia, president of the Petroleum Dealers Association of the Philippines; and Joey Leviste, former executive director of then Petroleum Board.

Perez had recommended the review of RA 8479 as early as December 2004.

IBON Foundation recommended the expansion of the panel to include sectors affected by the spate of oil price hikes and non-government groups that had maintained their stand against oil deregulation.

For its part, the Bagong Alyansang Makabayan (Bayan or New Patriotic Alliance) said that it will form a “people’s review committee” that will analyze the impact of oil deregulation.

The broad alliance Kontra Kartel (A Movement of Citizens Against Oil Cartel and Oil Deregulation Law) meanwhile called on the Arroyo administration for a period of regulation during the 90-day review which is similar to what happened in late 1997 where the then Energy Regulatory Board (ERB) was mandated once again to assume quasi-judicial functions. At that time, there was a brief regulatory period following the Supreme Court ruling declaring the first oil deregulation law unconstitutional.

GMA, patron of oil cartel?

Meanwhile, labor center Kilusang Mayo Uno (KMU, or May One Movement) has called the recent oil price hikes as "totally unacceptable and unjustified."

In a statement, KMU chairperson Elmer Labog said Shell, Caltex, Petron and new oil players used the rising prices of crude oil in the world market as a convenient excuse to hike their prices.

"These oil companies raked in billions of profits by overpricing petroleum diesel and gasoline prices,” Labog said. “The oil companies' ultimate goal for more profit is at the core of the recent oil price adjustments. The double whammy of oil price hikes and power rate increase proposal of Meralco will cause further damage to workers' livelihood."

Labog called on Malacañang and President Gloria Macapagal-Arroyo to act immediately on this matter. "Arroyo must stop acting as a patron of the oil cartel," he said.

Workers and transport groups were planning nationwide protests against oil price hikes and onerous government policies, the labor leader said. "We have had enough of excessive oil price hikes. We are asking for urgent oil price rollback, scrapping of the oil deregulation law, imposition of price controls and immediate substantial wage increase," said Labog.

"Whether the local oil industry is under deregulation or regulation, if there is no genuine nationalization of the oil industry, and foreign controlled oil monopoly will not be dismantled, the people will continue to suffer due to sky-high oil prices," Labog concluded.

Buy back Petron, repeal RA 8479

In a statement, Rep. Crispin Beltran (Anakpawis) said he supported Senate President Franklin Drilon's suggestion that the government buy back 11 percent of Petron to regain control of the former state-owned oil company. Surigao del Norte Rep. Robert Ace Barbers, chair of the House Committee on Accounts, has revived a similar proposal in the House to regain control of Petron, the biggest player in the downstream oil industry.

Beltran said the move should end the greedy price manipulation of the oil cartel while encouraging the nationalization of the downstream oil industry. “The Philippine government should not be afraid to rescind its contracts with foreign investors if it means defending the welfare of the Filipino people against the escalating prices of oil and consequently that of basic goods and rates of crucial social services," he said.

Beltran contended that the national government should fully control the oil industry, and in the process, repeal the oil deregulation law. Beltran filed House Bill 1064 which calls for the repeal of RA 8479, on the first session day of the 13th Congress in July 2004.

Cushioning the impact

To cushion the impact of the skyrocketing prices of oil in the world market, the DoE has appealed to oil companies to stagger any planned oil price hike “to soften the impact on motorists."

Perez, who steps down on March 15, also asked major oil companies to increase the number of gasoline stations in the country that provide a P1 ($0.02) per liter public transport discount on diesel.

"We believe that this is a way that we could mitigate the impact (on oil price hikes)," he said. Only 250 out of 4,000 gasoline stations nationwide give the special discount. Bulatlat

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