Protesting Bayan vs Oil Overpricing Launched

 

Metro Manila

 

August 31, 2011

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Photos courtesy of KMU and AGHAM as indicated by the file names
           
     

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‘Protestang Bayan’ vs. oil overpricing launched

Condemning the Big 3’s overpricing of petroleum products and the Aquino government’s collusion with oil companies, thousands gathered in various protest centers in Metro Manila today to call for an immediate P9.00 rollback in the per liter prices of oil.

The coordinated local actions are part of the “Protestang Bayan laban sa Overpricing sa Langis at Sabwatang Noynoy-Kartel,” which also saw jeepney drivers launching a protest caravan to the main office of Shell Philippines and holding transport strikes in Southern Tagalog and Bicol regions.

The Metro-wide protest gathered hundreds in the following: Sta. Mesa and Anda Circle in Manila; Litex, Philcoa, Cubao and Elliptical Road in Quezon City; Monumento in Caloocan; Marikina; and other areas.

“The Big 3 persists in overpricing oil products and the Aquino government continues to collude with the oil companies. Because we want an immediate relief in the form of an immediate P9.00 rollback in the per liter prices of oil products, the Filipino workers and people are left with no choice but to unite and fight,” said Elmer “Bong” Labog, KMU chairperson.

“It is simply not true that Petron, Shell and Caltex are merely following price movements in the world market. It’s their mother companies who are dictating global oil prices and they are overpricing local petroleum products by P9.00 per liter at the least,” he added.

KMU claims local oil prices have been overpriced by at least P9.00 per liter, accumulated since January 2008. It says whenever there is a price hike in the world market, the Big 3 increases local prices by amounts higher than that dictated by the world market. Whenever there is a price rollback in the world market, the Big 3 reduces prices by amounts lower than that dictated by the world market.

Led by labor center Kilusang Mayo Uno, the protest brought together the following: the Kalipunan ng Damayang Mahihirap, Confederation for Unity, Recognition and Advancement of Government Employees, Gabriela, Migrante, Anakbayan, League of Filipino Students, among other organizations, as well as progressive partylists Anakpawis, Bayan Muna, Gabriela, Kabataan, and Act Teachers.

The protest caravan and transport strikes were led by the Pagkakaisa ng mga Samahan ng Tsuper at Operators Nationwide or PISTON.

“We are calling on the Filipino workers and people to intensify protests against the overpricing of petroleum products in the coming weeks. We have to match the Big 3 and the Aquino government’s determination in robbing us through overpricing with our determination to fight,” Labog said.

“The overpricing of petroleum products has become simply intolerable for those who are receiving meager wages or are jobless in the first place and are directly using petroleum products in the house or in earning a living. We vow to continue the fight in the coming weeks,” he added.

Reference Person: Elmer “Bong” Labog, KMU chairperson
Campaign: Kabuhayan at Katarungang Panlipunan, Ipaglaban!
Contact information: 0908-1636597

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[A day before nationwide protest] Big 3 carrying on with overpricing modus operandi – KMU

Labor center Kilusang Mayo Uno condemned the Big 3 oil companies after industry giants Shell and Caltex implemented a price hike today, saying the Big 3 oil cartel is continuing with its modus operandi in overpricing local petroleum products.

Citing price movements in the world market, Shell and Caltex increased the prices of unleaded gasoline by P0.35 per liter, regular gasoline by P0.50 per liter, and kerosene by P0.15 per liter effective 6:00 am today.

The Department of Energy, in response, said the recent international price movement corresponds to a mere P0.18 per liter increase in price of unleaded gasoline.

“We have seen the Big 3’s modus operandi in overpricing local oil products this August and we are revolted. The Big 3 continues to rob the Filipino workers and people of our hard-earned money through overpricing,” said Elmer “Bong” Labog, KMU chairperson.

“The price rollback implemented on the third week of August was smaller than what the price movement in the world market dictate. After a price hike on the fourth week of August, another price hike is implemented this week – which is higher than what global price movements dictate,” he added.

The price rollback on the third week of August was preceded by the DOE’s statement that oil companies should rollback per liter prices by not less than P2.00. The Big 3 instead implemented a less than P2.00 price rollback, which legislators say is way below the P5.00 dictated by the world market.

KMU is calling for an immediate P9.00 rollback in the per liter prices of oil products, which it says corresponds to the Big 3’s accumulated overpricing per liter since January 2008.

Protestang Bayan Laban sa Overpricing at Sabwatan

KMU called on the Filipino workers and people to participate, in various ways, in the “Protestang Bayan Laban sa Overpricing at Sabwatan ng Kartel at Pamahalaan,” which it will hold tomorrow, August 31.

“We have every right to be outraged. Amidst worsening poverty and hunger, the Aquino government, instead of protecting us from the Big 3, is allowing, even conniving with the oil cartel to exploit us through monopoly pricing and local overpricing,” said Labog.

“Tomorrow’s nationwide protest against overpricing and the collusion between the Aquino government and the oil cartel is a ‘big-time kickoff’ for “big-time protests” in the coming weeks,” he added.

“Hundreds from different sectors will hold noise barrage protests in each of the more than 20 protest centers in Metro Manila tomorrow. Transport workers headed by PISTON will hold a transport caravan to the main office of Shell. Transport strikes will be held in the Southern Tagalog and Bicol regions,”said Labog.

Reference Person: Elmer “Bong” Labog, KMU chairperson
Campaign: Kabuhayan at Katarungang Panlipunan, Ipaglaban!
Contact information: 0908-1636597

 

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KMU, other groups announce Aug. 31 protest vs. oil overpricing

Labor center Kilusang Mayo Uno, together with the Pagkakaisa ng mga Samahan ng mga Tsuper at Operator Nationwide (Piston), Bagong Alyansang Makabayan (Bayan) and Anakpawis Partylist announced today that they will be holding a nationwide protest on August 31 to condemn the overpricing in local petroleum products and the Aquino government’s collusion with the Big 3 oil cartel.

They said the protest, dubbed “Araw ng Paglaban sa Sabwatan ng Kartel sa Langis at Pamahalaan,” is a “big-time kickoff” for “big-time protests” in the coming weeks. It will feature marches, assemblies and noise barrages in various parts of Metro Manila and the country.

“We are calling on the Filipino workers and people to translate their discontent into dissent, their anger into action against the overpricing of petroleum products and the Aquino government’s connivance with the Big 3 on August 31,” said Elmer “Bong” Labog, KMU chairperson.

“Because we know that the Aquino government will not by itself give the Filipino workers and people an immediate relief from the soaring prices of petroleum products, we are calling on everyone to join the protests and press for a P9.00 per liter rollback immediately,” he added.

Just the start

KMU said the August 31 protests will just be the kick-off of a bigger protest in the weeks ahead.

“Our August 31 protest is just a kick-off which we hope will jumpstart an even bigger protest in the coming days, one which will draw in the participation of more workers, poor people and transport workers,” Labog said.

“Given the intensifying speculation in oil prices worldwide, the oil monopoly’s rapacity for profits, and the Aquino regime’s collusion with the oil cartel, we know that our fight for an immediate relief on the issue of oil will be a protracted one,” he added.

“We are also calling for the repeal of the Oil Deregulation Law, which has allowed oil companies to manipulate prices to serve their greed for profits. We simply cannot trust profit-greedy corporations to control the pricing of a commodity as important as oil,” he said.

Reference Person: Elmer “Bong” Labog, KMU chairperson
Campaign: Kabuhayan at Katarungang Panlipunan, Ipaglaban!
Contact information: 0908-1636597

 

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Workers launch community protests vs. oil overpricing

Workers and urban poor lauched community protests today in Manila, Pasig and Marikina to condemn the Big 3’s overpricing of petroleum products, demanding that the Aquino government order a P9.00 rollback in the per liter prices of oil.

Led by the Kilusang Mayo Uno, the workers and urban poor held local marches, programs and noise barrage in Delpan and Anda Circle in Manila, San Joaquin in Pasig and at a venue near the Marikina Sports Complex.

They carried placards calling on the people to fight the overpricing of petroleum products and the Aquino government’s collusion with the oil cartel, as well as the demand for a P9.00 rollback in oil prices.

“Workers and the poor have had enough of the Big 3’s overpricing of petroleum products in the local oil market. We were further enraged by the meager less than P2.00 rollback in the per liter prices of oil last week, which was followed by a more than P1.00 increase this week,” said Elmer “Bong” Labog, KMU chairperson.

“Workers and the poor were further enraged by news that Petron, which earned the highest profits among corporations last year, further boosted its earnings by more than 100% from January to June this year. We are revolted by the fact that the big oil companies continue to amass huge profits by sucking poor people dry through overpricing and other schemes while we suffer from low wages and high prices,” he added.

More to follow

KMU said more community protests will follow in the coming days in Quezon City, Pasay and Makati.

“We will not stop protesting until we get an immediate relief from the soaring prices of oil and of other commodities significantly brought about by oil price hikes. The Aquino government is playing deaf to our calls right now but we will force it to listen with our local and national protests in the coming days,” Labog said.

“Our local unions, community organizations and chapters of transport groups are clamoring for bigger protests in the coming days. We know that without such protests, the Big 3 will go on overpricing their products and hiking prices at will, and that the Aquino government will continue conniving with the Big 3 in the latter’s profiteering schemes,” he added.

Reference Person: Elmer “Bong” Labog, KMU chairperson
Campaign: Kabuhayan at Katarungang Panlipunan, Ipaglaban!
Contact information: 0908-1636597

 

     
     
     
     
     
     
     
           

 

PISTON Media Release: Aug. 31, 2011:

 

Nationwide Peoples Protest ngayong araw Matagumpay.

Unified Transport Strike iaamba.
by George San Mateo on Wednesday, August 31, 2011 at 4:31pm
 

Nationwide Peoples Protest ngayong araw Matagumpay. Babala ng PISTON na ito ay patikim pa lang. “Big Time Unified Transport Strike” ikinakasa ng PISTON at ng iba pang malalaking grupo sa transportasyon

P9 Big time rollback, at pagtigil sa Overpricing at pagtigil s sabwatan ng Gobyernong Aquino sa Big 3 iginiit ng PISTON

Sa Transport Protest Caravan ngayong umaga na isinagawa ng mga jeepney at FX drivers sa punong tanggapan ng Shell, Chevron at Petron, mariing iginiit ng transport group PISTON na itigil ang overpricing sa presyo ng langis at kagyat na ipatupad ang P9 big time oil price rollback. Ayon sa grupo, umabot na sa P9 ang overpricing sa presyo ng langis mula Enero 2008 hanggang Hulyo 2011. Nagtipon muna ang mga miyembro ng PISTON sa Quezon Circle bandang 8:30 ng umaga. Bandang 11:30 am dumating ang transport caravan sa tanggapan ng Shell sa makati na kung saan mahigit 50 jeepneys at FX and sumama sa caravan na nilahukan ng 150 drivers ng jeepney at FX.

Nakiisa din at nagtalumpati si Bayan Muna Rep. Teddy Casino sa transport caravan rally na isinagawa ng PISTON sa tanggapan ng Shell sa Makati. Si Rep. Casino ang main author ng House Bill 4355 na naglalayong ibalik sa regulasyon ang industriya ng langis sa Pilipinas at ipatupad ang mga hakbang tungo sa pagsasabansa nito para mawakasan ang control at dominasyon ng Dayuhang monopolyong kartel ng Big 3 sa ating bansa.

Ayon kay PISTON Secretary General George San Mateo, hinihiling din nila sa gobyernong Aquino na itigil na ang sabwatan nito sa Big 3 Oil at ipatupad ang pagbasura sa Oil Deregulation Law na siyang nagbigay-lisensya at laya sa Big 3 Oil cartel na magpatupad ng overpricing sa langis. Aniya, hiling din nila ang pag-alis sa 12% EVAT sa langis na siyang dahil kung bakit kinukunsinti ng gobyernong Aquino ang overpricing sa langis dahil kumikita ang gobyerno ng malaking 12% EVAT sa langis habang patuloy na lumolobo ang overpricing.
 

 

Ang naturang transport caravan ng PISTON ay bahagi ng Nationwide People’s Protest ngayong araw na pinangunahan ng PISTON, Kilusang Mayo Uno (KMU) at Bagong Alayansang Makabayan. (BAYAN) . Kasabay ng transport caravan ay ang mga multi-sectoral rallies sa iba’t ibang bahagi ng Metro Manila gaya ng sa Monumento, Baclaran, Novaliches, Sta. Mesa, Oil Depot sa Pandacan, Philcoa, Cubao at iba pa na lalahukan naman ng mga manggagawa, estudyante, government employees, kababaihan at iba pang sektor.

Sa mga lalawigan naman ay umarangkada na ang regionwide transport strikes na isinagawa ng mga regional chapters ng PISTON sa Bicol at Calabarzon areas habang sinugod naman ng mga miyembro ng PISTON, KMU at BAYAN ang tanggapan ng Dept of Energy sa Cebu City at Davao City. Umarangkada din ang iba’t ibang people’s and driver’s rally protest sa Santiago City at Tuguegarao sa Cagayan Valley, Baguio City, Angeles City, Bacolod, General Santos, Cagayan De Oro, Butuan at Surigao City at ilan pang lugar sa Mindanao.


Samantala, sinabi ni San Mateo na naparalisa ng CONDOR-PISTON-BICOL ang 95% ng pampublikong transportasyon sa 5 prubinsya ng naturang rehiyon. Aniya ang naparalisang lalawigan sa Bicol ay ang mga sumusunod: 99% sa Sorsogon, 98% sa Albay, 95% sa Masbate, 92% sa Camarines Norte at 85% sa Camarines Sur. Habang lsa Catanduanes naman ay lumahok sa protest rally ang mga miyembrong traysikel drivers ng Federation of Virac Trycicle Operators and Drivers Asssociation (FEDVITODA-CONDOR-PISTON)

Sa Southern Tagalog naman ay partial report palang ang nakukuhang ulat ng pambansang tanggapan ng PISTON mula sa STARTER-PISTON-SOUTHERN TAGALOG. Ayon sa partial na ulat sa Lalawigan ng Laguna ay 100% ng mga jeepney ang tumigil sa bayan ng San Pedro, Pacita, Binan, Sta. Rosa, Cabuyao at rutang Canlubang papuntang Calamba.

Binigyang-diin ni San Mateo na ang National day of People’s Protest ngayong araw ay patikim pa lang. Aniya pinagpaplanuhan na nila at ng iba pang malalaking grupo sa transportasyon ang isang Malaki at malawakang Unified Transport Strike upang paigtingin pa lalo ang panawagang itigil ang overpricing sa langis, ipatupad ang Big time P9 oil price rollback at itigil ng gobyerno ang sabwatan sa Big 3 foreign oil monopoly cartel, ibasura ang |Oil Deregulation Law at 12% EVAT sa langis at ipatupad ang pagsasabansa sa industriya ng langis sa Pilipinas upang mawakasan ang overpricing, control at dominasyon ng Big 3 foreign oil monopoly cartel sa industrya ng langis sa ating bayan. # # #

           
     
     
     

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Big Three's profits more than combined income of country's poorest families
IBON NEWS | 5 May 2011 | IBON reiterates its position against the oil deregulation policy because it encourages such wanton profiteering at the expense of Filipino consumers.

The profits of the Big Three oil firms are rising as rapidly as the increasing oil prices, with a record of at least Php141.7 billion in profits in the last decade. This is more than the combined income of the country’s poorest 2.36 million families– amounting to Php114.3 billion in 2009, research group IBON said.

The figures debunk the Big Three’s claims that local price hikes are needed so that they can recover losses from the global oil price movements. The research group said the call for real transparency in the domestic oil industry remains urgent to make sure that the Big Three is not profiting at the public’s expense.

The local price of diesel increased from Php13.96 per liter in 2001 to peak at Php44.31 in 2008 before falling slightly to Php41.26 in 2010. The price of regular gasoline meanwhile increased from Php16.58 in 2001 to Php45.92 in 2008 and then further to Php48.73 in 2010.

At the same time, the net income of Pilipinas Shell increased six-fold from Php3.1 billion in 2001 to Php19 billion in 2008 and then Php16 billion in 2009 with total net income over the 9-year period reaching Php73.0 billion. The net income of Chevron increased eleven-fold from Php1 billion in 2001 to Php10.7 billion in 2007 then Php8.6 billion in 2008, before dipping to Php8.3 billion in 2009. Its total net income over the period 2001-2009 reached Php40.2 billion.

Profit data for Petron is incomplete but its profits increased from Php1.2 billion in 2001 to Php6.1 billion in 2007, totaling Php28.6 billion over the 7-year period. It has reportedly booked Php1.9 billion in profits in the first quarter of 2010 alone.

Globally, mother companies of the Big Three firms are also raking in superprofits with the oil price hikes. The price of Dubai crude increased from an annual average of US$22.70 per barrel in 2001 then peaked at US$ 94.80 in 2008 before falling to US$78.10 in 2010. The price of Dubai crude has again begun to rise rapidly and is already at some US$120 per barrel.

The profits of Royal Dutch Shell more than doubled from US$10.9 billion in 2001 to US$26.3 billion in 2008 and fell slightly to US$20.1 billion in 2010. Its total profits over the decade 2001-2010 reached US$192 billion – or more than the value of the Philippine economy, measured by gross domestic product (GDP), in 2010 of US$189.0 billion.

The profits of Chevron in turn increased over seven-fold from US$3.3 billion in 2001 to US$23.9 billion in 2008 before dipping to US$19 billion in 2010. Its total profits in the last decade reached US$128.3 billion.

These figures show that price increases have benefited the oil monopoly tremendously. Locally the deregulation and its principle of automatic price adjustments have allowed the Big Three to amass huge profits while further strengthening the industry cartel. IBON reiterates its position against the oil deregulation policy because it encourages such wanton profiteering at the expense of Filipino consumers. (end)

 

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IBON urges progressive specific tax system in place of VAT on oil
 

IBON proposes an improved progressive system of specific taxes on unproductive sectors wherein socially sensitive oil products diesel, LPG, and kerosene are exempted while personal, corporate income and wealth-related taxes are higher.

If the Aquino government is seriously looking for measures that would cushion the impact of high oil prices on consumers and the local economy, it should immediately reverse the imposition of the 12% value-added tax (VAT) on petroleum products, said research group IBON Foundation.

Instead of the regressive VAT, IBON proposes an improved progressive system of specific taxes on unproductive sectors wherein socially sensitive oil products diesel, LPG, and kerosene are exempted while personal, corporate income and wealth-related taxes are higher.

Government benefits extremely from oil price increases through the VAT on oil products. A Department of Finance (DOF) official recently gave an estimate of Php4 billion in VAT windfall that government expects to receive by end-March. However IBON argues that without the VAT, oil pump prices may go down by as much as Php 5 per liter and will provide relief to a large number of consumers.

The savings from oil prices mean more money for consumers to spend directly on their needs. Local establishments, particularly those whose operations are fuel-intensive, would also benefit from lower operating or production costs. IBON added that, contrary to government claims, bulk of total revenues from the VAT (58%) does not go towards much needed social services but to debt servicing. Moreover, government can make up for revenue loss even if it scraps the VAT on oil through alternative revenue measures that are less burdensome to consumers.

Government began imposing the 12% VAT on petroleum products in 2006, which compounded the problem of soaring oil prices under a deregulated downstream oil industry. There have been nine rounds of increases in diesel prices and eight rounds of gasoline price hikes since January 2011. These increased the pump price of diesel to Php6 Php8.35 per liter and regular gasoline by Php6.25 in the first quarter.

Lastly, the research group stressed that the deregulation of the oil industry has burdened the people with more exorbitant petroleum prices while oil firms are not required to justify their price increases. As global prices of oil continue to rise, IBON renews its call to scrap the deregulation law to pave the way for state control of prices. (end)

 

 

     
     
     
           
           
     
     
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Diesel, gas prices could be cheaper by Php6/liter without VAT; Reverse VAT to ease impact of oil price hikes, gov't urged

 

IBON News | 06 April 2011 | Consumers of regular gasoline would have paid o only Php48.26 per liter and not the current Php54.85 without the VAT. Diesel, meanwhile, would have been priced at only Php41.45 per liter without the VAT

 

With the public bearing a new round of oil prices hikes, research group IBON reiterates its call for government to reverse the value-added tax (VAT) on petroleum products, saying that gasoline and diesel pump prices could have been lower by Php5.70-6.60 per liter.

According to IBON, consumers of regular gasoline would have paid o only Php48.26 per liter and not the current Php54.85 without the VAT. Diesel, meanwhile, would have been priced at only Php41.45 per liter without the VAT. (See table)

 

Oil product

Price with VAT

Price without VAT

Difference

Regular gasoline

54.75

48.26

6.58

Diesel

47.10

41.44

5.65

 

The VAT on petroleum products is one of the largest sources of revenues for the government. Yearly since 2006, oil VAT revenues averaged Php48 billion. Pres Aquino thus recently again rejected calls to even at least bring down the VAT percentage on oil amid the increasingly harsh impact of high oil prices on the public.

IBON stressed that contrary to government claim, the bulk of VAT revenues (58%) do not go to social services but to debt payments, and that government should find alternative measures to raise revenues that are less heavy on consumers.

Pump prices of diesel and gasoline have increased 11 times from January to April, bringing the total increase of Php8.35 per liter for diesel and Php6.50 per liter for regular gasoline. (end)

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Presyo ng Diesel, gasolina pwedeng mas mura nang Php6/litro kung walang VAT 

Sa harap ng panibagong pagtaas sa presyo ng langis, muling nanawagan ang IBON sa gubyernong Aquino na alisin ang ang value-added tax (VAT) sa mga produktong petrolyo. Kapag inalis ang regresibong buwis na VAT sa produktong petrolyo, ang mga presyo ng gasolina at diesel ay maaaring mas mababa nang Php5.70-6.60 kada litro.

Ayon sa IBON, Php48.26 kada litro lamang
sana ang binabayad ng mga konsyumer ng regular na gasolina at hindi ang kasalukuyang Php54.85 kung wala ang VAT. Samantala, ang presyo sana ng Diesel ay Php41.45 kada litro lamang nang walang VAT (Tingnan ang table). 

Oil product

Price with VAT

Price without VAT

Difference

Regular gasoline

54.75

48.26

6.58

Diesel

47.10

41.44

5.65

Ang VAT sa mga produktong petrolyo ay isa sa pinakamalalaking pinagkukunan ng gubyerno ng kita. Taun-taon simula 2006, nag-abereyds sa Php48 bilyon ang kita sa VAT sa langis. Kumakailan, tinanggihan ni Pang. Aquino na ibaba man lamang ang porsyento ng VAT sa langis sa gitna ng lalong tumitinding epekto ng mataas na presyo ng langis sa publiko.

Pinuna din ng IBON na taliwas sa sinasabi ng gubyerno, ang bulto ng kita sa VAT (58%) ay hindi napupunta sa panlipunang serbisyo kundi sa bayad-utang ng gubyerno. Hinikayat ng IBON na maghanap ng alternatibong hakbang upang maglikom ng kita ang gubyerno halimbawa sa mga imported at produktong luho sa halip na sa mga produktong tulad ng petrolyo na may direktang epekto sa pagtaas ng presyo ng mga batayang bilihin. 

Ang pump price ng diesel at gasolina ay tumaas nang 11 beses mula Enero hanggang Abril. Umabot na ang pangkalahatang pagtaas sa Php8.35 kada litro para sa diesel at Php7 kada litro para sa regular na gasolina. 

 

     
     
     
     
     
           
           

 

Putting the brakes on oil prices
August 4, 2011 - 4:01pm — webteam

Author:
Dr. Giovanni Tapang, PhD
Author Description:
Dr. Tapang is the chairperson of AGHAM-Advocates of Science and Technology for the People.


I HAD hoped that a previous column on oil prices would have been the last but with local gasoline prices increasing upwards 15 times already this year alone (2011), answering the question of how to put the brakes on skyrocketing oil prices becomes imperative. Oil firms and government are singing the same tune as to the supposed reason for the increases: that it is the world market that dictates oil prices and that we are essentially helpless in this regard.

Yet even limiting ourselves to their argument, local pump prices do not elastically follow the ups and downs of world market prices. As clearly pointed out by militant transport groups and consumer advocates, profiteering comes in when oil companies raise their prices when world market prices rise up but fail to roll them back with the same magnitude when the reference prices go down. This translates to around as much as P7.50 per liter in sheer profiteering.

Government itself is happy with higher oil prices as it racks up windfall taxes due to the Value Added Tax on oil products. Proceeds from this 12 percent VAT amounted to around P47 billion in 2010. Government collects this revenue to the detriment of oil consumers. By removing the VAT and the profiteering margin of oil companies, prices of oil can come down by at least ten pesos per liter immediately.

Yet the high oil prices story is not simply about profiteering and indirect taxation. A paper on the academic physics journal Physica A in 2009 has shown clear evidence that the rapid increase in oil world market prices is mainly due to speculative pressure. Didier Sornette and co-authors pointed out that “the recent oil price run-up [2006-2008] was amplified by speculative behavior of the type found during a bubble-like expansion.” Analyzing the time-series data from observed prices of crude oil contract prices (using quantitative Log-Periodic Power Law analysis, for the curious), they noted that the “faster-than-exponential” price growth is indicative of a speculative bubble and not of an imbalance in supply and demand.

In simpler terms, there is enough oil around but market speculation pushed oil prices upwards at a rate that is simply too much faster than natural. Now it seems that the news in the Middle East has fueled another round of speculation that is again pushing current oil prices upwards.

Another big factor in the high oil prices is the monopoly power of a few corporations to manipulate oil prices at different levels due to their inherent vertical structure. The oil firms that both produce and sell crude oil as well those that buy and refine are largely the same. According to IBON Foundation, these companies can manipulate the price of oil by manipulating benchmark prices and intra-corporation term contracts and transactions (transfer pricing). One estimate is that only one-ninth of the price of oil is the actual production cost of bringing a barrel of oil to one’s shores.

What can we do as a country to control oil prices? Surprisingly (or perhaps not), there is a lot that we can do.

Natural gas and coal
We do have alternative energy sources that are available for us to use in lieu of oil. The Philippines has natural gas reserves of around 661 million barrels of oil equivalent (boe) and coal reserves of 1.74 billion boe. Potential reserves could bring this up to around 8.6 billion boe (coal) and 700 million boe (natural gas). Proper utilization of these resources for our own benefit instead of selling this off to foreign interests should be done. These reserves can power our growing needs up to a decade even without oil imports.

Centralized procurement
This just means that we can substantially reduce our dependence on oil. Yet we do need to import oil to produce petrochemical derivatives and other fuel. Government can start with a system of centralized procurement of imported crude oil and refined petroleum products. With this arrangement, government can enter into longer and stable oil term contracts that it can then refine locally. It can also enter into commodity swap and other non-traditional trade arrangements in making oil purchases such as that between Turkey and Nigeria as well as that of Venezuela and Cuba. A long term buffer supply should also be created as well as a fund (different from the oil price stabilization fund (OPSF) to cushion the impact on consumers of sudden increases in oil prices.

Government can actually do these in part already if it buys back Petron Corporation. Petron has refining capacity, storage facilities, distribution lines as well as 40 percent of the domestic market. Government can then actively transform the local oil industry into a nationalized industry that will not only establish mechanisms to ensure reasonable pump prices but harness the whole oil industry to support national industrial policy since oil has other uses such as producing plastics, lubricants and even farm inputs such as fertilizers and pesticides.

Author:
Dr. Giovanni Tapang, PhD
Author Description:
Dr. Tapang is the chairperson of AGHAM-Advocates of Science and Technology for the People.

 
 
 
     
   
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