Flood of indecision
When the oil industry was deregulated in 1998, the unbundling of bills at the pump should have accompanied it.
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When the oil industry was deregulated in 1998, the unbundling of bills at the pump should have accompanied it.
Leaving a vital commodity such as fuel to the mercy of profit-hungry oil companies under the Oil Deregulation Law during a crisis like the one the nation is currently facing has revealed the law’s disadvantages.
The rocketing price of oil is strangling the struggling majority of Filipinos and the government appears helpless, primarily because of the law that prohibits practically any form of state intervention.
Center for Energy, Ecology and Development (CEED) executive director Gerry Arances traced the wide gap between fuel prices in the country and its neighbors to our allowing oil firms to dictate the terms.
When the domestic oil industry was deregulated in 1998, the unbundling of bills at the pump should have accompanied it.
“The idea of deregulation is that if you leave it to the market, the government must still retain regulatory powers, especially during crisis situations,” Arances stressed.
The country imports 98 percent of its petroleum requirements, which has resulted in it experiencing the sharpest and highest fuel price spikes. Our neighbors are faring better because of their policy tools.
Malaysia and Indonesia keep domestic prices artificially low via subsidies and controls, resulting in the lowest effective prices for consumers, while Thailand uses price caps. Vietnam has suspended fuel taxes.
The Philippines must still wade through the bureaucracy and the vacillating administration before it can come up with a proper response.
Full deregulation has become the consumers’ burden, putting them at the mercy of the oil giants. Arances explained that, with the law, the government’s hands are tied.
“And now, we even need to allocate funds just to ensure supply, imagine that,” he added.
What it amounts to is that the public shoulders the burden of the crisis through taxes.
The nation’s experience during this crisis proves the government cannot simply leave everything up to the market, because the impact on consumers is not being cushioned.
The baseline requirement is transparency in the determination of prices, which are not being monitored by the agencies assigned to do this such as the Department of Energy and the Energy Regulatory Commission. “So how can they validate the prices?” Arances asked.
Ultimately, the consumers suffer. Immediate actions are the government’s obligation. The severe impact on commuters and drivers who are bearing the burden is not being addressed, even through a minimal fare increase.
Thus, indecision triggers a chain of uncertainties that would reflect on the growth momentum. Businesses rely heavily on transport, thus the prices of all goods are affected.
Vietnam exercised political will by suspending fuel taxes. The price of diesel, which is beyond P120 per liter at domestic pumps, is only about P55 in Hanoi.
“This is already around a month after the war and the excise tax is still intact. And mind you, our problem with corruption has not disappeared. So what can we expect in terms of the proper spending of those taxes,” Arances held.
Arances pointed to directing the government’s attention to mass transport systems as a priority and not allowing it to be susceptible to irregularities such as the relegation of vital projects to unprogrammed appropriations (UA) in the national budget from which members of Congress get their kickbacks.
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