Bangis: Krisis sa Langis
Crude oil and various petroleum products are crucial in literally fueling the economy of a nation, ensuring its security and defense and help provide basic consumer needs. Presently, oil has become a strategic and vital product to the global nations. If blood is the lifeline of our body, then oil is the lifeline of the economy, even sustains the life of a nation.
Ang langis ang nagpapatakbo sa industriya at serbisyo hanggang sa mga batayang gamit pangkonsumo. Ang langis ang nagpapatakbo sa mga makina ng sektor ng manupaktura at makinaryang agrikultural, sa mga sasakyan sa lupa, karagatan at sa kalawakan. Mahalaga ang langis mula sa paggana ng ating mga kalan sa kusina hanggang sa pagpapaandar ng ekonomya ng bansa.”
Speech of Anakpawis Representative Crispin Beltran
2008 Philippine Energy Summit,
January 29, 2008, SMX Convention Center
(former taxi driver and factory worker)
We are very much aware that the oil industry is very vital to the nation’s development. Our country is is a sanctuary of oil and energy sources such as the Malampaya and Nido in Palawan and the Liguasan Marsh in Central Mindanao. However, these and other potential energy sources like coal and geothermal are left for exploration and development in the control of foreign corporations, making us heavily reliant on imported oil products and its unending swelling of prices and eventually buying our own locally sourced new energy and power sources from foreign firms at higher costs.
Last year, the prices of various gasoline products increased by 24% (P35.75 to P44.45) while diesel prices hiked by up to 21% (P31.75 to P38.45). Cooking gas or LPG, most commonly used in households posted an increase of 21.95% (P533 to P650). Retail prices of kerosene which is used by small fishers as well as most households in the countryside and urban poor communities have jumped by 14%. Since Mrs. Gloria Macapagal-Arroyo rose to power in 2001, prices of gasoline products increased by 143% up to 147%; diesel prices increased by 172%. For the past twelve years since the Downstream Oil Industry Deregulation Law was enacted in 1996, prices of gasoline products increased by 352% to 364%; diesel by 434%; kerosene by 454% and LPG by 356%.
Majority of the basic masses with very low purchasing power suffer the burden of increase in prices of basic commodities that rise up with the price of oil. The government even joined in bleeding the people dry by imposing a 12% RVAT on these products.
Jeepney drivers, for instance, will have to work doubly hard to earn a decent income for their families with unabated diesel price hikes. Last year alone, a jeepney driver’s daily expense for diesel increased by P147.30 as the prevailing pump price of diesel jumped by P4.91 per liter between January and November 2007. (Based on transport group Piston’s estimate that a jeepney driver consumes an average of 30 liters of diesel per day) Diesel costs jeepney drivers around P1,125.90 per day and has to hand over between P600 to P900 (depending on the unit’s seating capacity) as daily “boundary” to the jeepney owner or operator. This means that he can only start earning for his family if he has already made P1,725.90 to P2,025.90 to cover for the diesel cost and the operator’s share.
In line with this, concrete and decisive steps must be implemented to stop these attacks on the income and livelihood of our people.
Repeal Republic Act 8479 or the Oil Deregulation Law
One concrete, urgent and practical solution to the ills of high oil prices is to repeal the Downstream Oil Industry Deregulation Law.
The Filipino people has suffered its wounding impacts such as under deregulation, oil companies are no longer compelled or bound by law to justify the increases. Under the same policy, Oil Price Stabilization Fund (OPSF) or subsidies on oil products was removed. The fund could have still been utilized to mitigate the effects of oil price hike more so that the public is demanding for transparency and accountability from its government. And lastly, the declaration that the law would result to effective competition and accessibility with the entry of new industry players did not result in competition and affordability nationwide, particularly in the rural areas.
The monopolistic control of transnational corporations was further encouraged by the Oil Deregulation Law. The existence of Petron, Royal Dutch-Shell, and Chevron (formerly Caltex) in the oil industry is the immediate reason for the overpriced and incessant increase in oil prices. They shamelessly and uncontrollably dictate the price of oil, pressure countries, even OPEC member countries, to create the market beneficial to their aim of earning billions of dollars.
Imagine, six oil giants control the oil industry from exploration up to retailing of petroleum products making them the richest and most powerful block in the world. Even the Supreme Court in its decision on the constitutionality of the 1996 version of the oil deregulation law affirms the existence of such foreign oligopolistic control in the local oil industry. That is the reason why it is disgusting to hear from the government that they can’t do anything to lower the oil prices.
Oil is a deliberately essential commodity and must, therefore, be developed and nationalized, under which price is controlled, for the benefit of the people. Through nationalization and regulation, there would be room for reforming purely profit-oriented mechanisms into a socially responsible handling of the oil industry. With a government at the forefront of managing the oil industry, it has the capacity to direct the downstream oil industry with the national thrust towards economic development.
Currently there are proposed measures in Congress filed by Anakpawis, Bayan Muna and Gabriela Women Party that we must espouse to address immediate and long-term solutions to the problems of the oil industry. These measures are:
House Bill 3029: An Act Regulating the Downstream Petroleum Industry - This proposal requires the regulation of the petroleum industry through the creation of a buffer fund and a Petroleum Regulatory Council that will not be bound by the dictates of oil companies. Regulation can only be effective and truly beneficial if it is part of a program to nationalize the oil industry, so that local oil prices can be brought down from unreasonable and unjustifiable levels set by giant transnational oil corporations and can be prevented from falling prey to further monopoly pricing and manipulation.
House Bill 3030: An Act Instituting Centralized Procurement of Petroleum in the Country - This bill sees the need to interdict the hidden and unchecked transfer pricing between oil company subsidiaries, including probable price padding in the sale of petroleum and petroleum products between refiners and local subsidiaries, to protect the majority of Filipinos from current runaway increases in oil prices. This can be done through centralized procurement of all imported crude oil and refined petroleum products, which includes the creation of buffer supplies to cushion consumers against drastic increases in petroleum prices, and the re-nationalization of Petron Corporation.
HB 3031: An Act Renationalizing Petron Corporation - This bill defines it as a State policy that the business of importing, exporting, re-exporting, marketing, distributing, and selling, whether retail or wholesale, as well as operations and activities of natural and juridical persons, firms, and entities engaged in such activities, shall be carried out in a manner consistent with the public interest. This policy aims to: a) To assure that locally refined and processed petroleum products, as well as imported crude oil and processed petroleum, be primarily for the benefit of the general welfare; and, (b) To assure the public of reasonable prices for petroleum products and to prevent unfair trade/business practices in the industry, particularly with regards to prices.
HB 1126: An Act to include LPG and Kerosene in the list of basic necessities in Section 3, Definition of terms of Republic Act 7581 or the Price Act - LPG and kerosene are considered basic household necessities and socially sensitive products. Ironically, both are not included in the list of basic necessities provided in Section three (3), Definition of Terms of Republic Act 7580, and otherwise known as the “Price Act.” Thus, the filing of this bill.
Other proposals include the moratorium on oil price hikes and the suspension of the 12%-Value Added Tax on oil products for a period of six months. When passed and sincerely implemented, can give immediate relief to almost half a million jeepney drivers and their families and 8.6 million households consuming LPG and 9.4 million households using kerosene.
This must start with the government declaring as a matter of national policy that all activities relating to the downstream and upstream oil industry must be under regulation and supervision so as to allow the State to:
- Ensure adequate and continuous supply of crude oil and refined petroleum products under the most economic and competitive terms possible considering all available sources of supply, including local supply.
- Ensure that the entire petroleum industry serves the national interest and economic needs of the country.
- Ensure that the consuming public enjoys reasonable prices of petroleum products and prevent price manipulation, unfair competition and other trade abuses being committed primarily by big foreign oil corporations.
- Promote Filipino capital, labor and technology in the downstream and upstream oil industry.
- Uphold the constitutional guarantee of full state control and supervision over the country’s petroleum resources in the name of national interest and in pursuit of industrialization, while maximizing whatever benefits that foreign financial and technical assistance will bring in the exploration, development and utilization of local crude oil and other petroleum.
The diminishing accessibility of oil and basic commodities to the majority of the Filipino people is tantamount to eradicating our right to a dignified life. To reiterate what Ka Bel (Representative Crispin Beltran) pronounced, oil is the lifeline of the economy and we must struggle for the sustenance of the life of our nation.
REPEAL OIL DEREGULATION LAW!
SCRAP THE VAT ON OIL!
NATIONALIZE THE OIL INDUSTRY!
Sources:
Various IBON Databank position papers on the Oil Industry
Bagong Alyansang Makabayan Briefing Paper January 2008
Anakpawis Partylist
Bayan Muna Partylist
Gabriela Women’s Partylist
Sun Star
Philippine Daily Inquirer
Pinoy Weekly
(Prepared by the Peoples’ Struggles Committee of the University Student Council)
Is there really a relationship between Gloria’s term and the increasing prices of petroleum? What about the fact that, worldwide, the price of a gallon of gas has increased by 10.9 cents from last week (point of referrence, today is May 12) and 61.9 cents from last year? For Diesel, the increase has been greater. It is up 18.2 cents from last week and 155.8 cents from last year.
One cause of the price increase is speculative buying by investors. Simplified, it works like this: Because people expect prices to rise in the future, they are buying them now, which increases the demand and raises prices.
People also expect global oil production to decline. Please remember that petroleum is a non-renewable resource and as we consume more and more, the economically feasible cost of extraction rises. For companies to explore and extract new fuel reserves, the price of gas will have to go higher.
I agree that you raise some valid points about the fuel crisis, especially the part about it fueling an economy, but please research the causes correctly before you come out with an article like this. Knowing the causes better would enable you to make concrete proposals to actually solving a problem rather than just coming out with quick fix solutions to salve the people.
There is a relationship between Arroyo’s term and the increase of the prices of petroleum because the government has the capacity to repeal oil deregulation law and “moderate” the greed of the oil cartel.
Please have the courage to tell this statement—- “but please research the causes correctly before you come out with an article like this” straight to my face before challenging my credibility or even the credibility of my sources. I’ll be at the USC office, 1 pm on Friday (May 15), I’d be happy to give you a 2-hour lecture on this. Thank you for your response! ;p
I think both sides have valid points to offer, but i am dismayed at how Ms. Tajar replied. As an elected USC officer, i believe it is but proper for Ms. Tajar to respect the opinions of people who are commenting on this site, otherwise, there would be no point in having such features at all. She should be open to criticism and atleast, answer with propriety.
Her reply to FinandMarketing is a bit on the defensive side. And I must say that FinandMarketing has a point in questioning the credibility of her sources.
Also, may i inquire about the proposal to give a 6-month break on oil prices. What happens after? Won’t oil prices shoot up sky high after those 6-months? What can you say about people questioning this as a quick fix (not only here but also in the US and other countries)? And won’t tapping into Palawan, etc as sources of oil be ultimately detrimental to the environment, especially for a place as delicate as Palawan?
Are there an proposals to encourage alternative sources of energy? to lessen dependence on oil? Because if we declare oil as a basic need, then this will even boost our dependence on it, and is therefore not long-term.
Para kay Para sa Bayan:
Nirerespeto ko ang opinyon ni Fin and Marketing kaya nga natutuwa ako na nag-komento sya. Kaya lamang, hindi ko maiwasang madismaya sa implikasyon ng mga salitang ito—”but please research the causes correctly before you come out with an article like this”. Hindi ibig sabihin na iba ang opinyon n’ya ay mali na ang datos ng reseach at article ko. Hindi ba ganito ang dogmatic at imposing na posisyon? Hindi ako yuyuko na lamang kung may paratang na walang kredibilidad ang ginagawa ko sa anumang larangan. Iyan ang esensya ng pagiging aktibista. Kaya mo rin ipagtanggol ang sarili mo pati ang nakararami.
Kaya nga iniimbitahan ko sya na magdebate kami dahil masalimuot naman talaga ang usaping ito. Maaari ngang pareho kami ng datos ngunit magkaiba ng interpretasyon.
Ang mga kartel ng langis ay bumibili ng 6 na buwang advanced stock kaya walang lohika na sabihin na nagtataas sila ng presyo ayon sa pang-araw-araw na pagtaas nito sa pandaigdigang merkado. Ang “quick fix” ay isang band aid solution ngunit maaaring ibsan ang krisis sa langis sa panandalian. Kaya nga ang buod ng artikulong ito ay ang pagbasura sa oil deregulation law at pagsasa-bansa ng industriya ng langis. Ito ay mga pang-matagalang solusyon.
Ikinalulungkot kong ibalita sa iyo na ang mga likas na yaman natin sa Palawan at iba pang bahagi ng bansa na may reserba ng langis ay kasalukuyan nang inaabuso ng mga “mother oil companies” gaya ng Shell. Ito ay ipinapadala sa ibang bansa ngunit tayo ay umaasa sa madumi at double-standard na langis na ibinabagsak naman dito. Hindi tayo ang nakikinabang. Tama na may renewable resouces ngunit anong gagawin natin sa pangangailangan ng langis sa kasalukuyan?
Mayroon ba tayong national industry na maituturing para mapanatili ang mga ito? Anong nangyari sa bilyun-bilyong pisong halaga ng Bataan Power Plant? Hindi ba’t napabayaan lang?
ahh ok. thank you for explaining.
So are u pushing for the re-opening of the Bataan Power Plant as well?
A Nuclear Powerplant, or any other renewable/non-renewable energy sourc for that matter, shouldn’t be a problem if the technological & technical capacities of our country with regards to this is sufficiently capable in terms of effectivity & social/environmental safety. But S&T and R&D in this here country is under-funded, under-supported, under-developed, and greatly limited to forms that benefit our foreign masters more than us, semi-conductor manufacturing and Business Process Outsourcing (BPO) R&D..
So the challenge for a self-sustainable energy service isn’t merely limited to what source you use, but more on how it is harnessed and used. It isn’t as simple as a re-opening, large-scale changes are needed, though I do not claim to be an expert of how exactly reform should be implemented. As far as I know, the S&T advocacy group Agham has something to say about that, but that is a completely different topic unto itself.
Rising prices of oil is a global problem and is less about oil regulation policies of the current administration and more about the rising of petroleum prices all over the globe. The only real long-term solution is to decrease our dependency on it. How to do it, is an entirely different debate in itself.
As for nationalizing Petron and centralizing procurement, this potentially creates more problems than it sets out to solve. It seems counter-intuitive for someone who has utmost DISTRUST IN GOVERNMENT to want to CENTRALIZE and NATIONALIZE anything. If you don’t trust the government to manage current public funds then why would you trust them with an industry as profitable as oil? Its like giving candy to someone who has diabetes. The threat of nationalizing and centralizing anything has always been CORRUPTION and MISMANAGEMENT. Moreover, even if Petron were nationalized and procurement was centralized we would still have to buy our imported oil form OPEC. Given that oil prices are increasing all over the globe, the price would increase regardless. Although I think some form of regulation such as more transparent accounting and requiring corporations to adequately justify price increases, I really doubt that nationalizing the industry will result in anything good.
As for oil subsidies and a buffer fund - the first and foremost issue about this is its cost. As wonderful and welfare-state-ish as this proposal sounds, the pertinent question is can we afford it? Many countries far more well-off than ours are struggling to afford their oil subsidies and many have begun to lessen it if not scrap it altogether. Secondly, it only exacerbates our demand for oil. If people don’t feel the consequence of demand overpowering supply (which is price increase) then it removes the impetus for them to decrease their dependence on oil. Also it becomes quick sand when the demand increases and increases with government paying for the differential until it can no longer afford to, then government will have to stop subsidies and the industry goes into price shock. And if it were only a buffer for a 6-month period, they would have to pay the real price anyway after 6 months so might as well let market forces run its course because that way there would be less cost on public funds. Plus, these subsidies and buffers are but illusions when you look at the bigger picture because the money that will be used for it will come from the people too. So its the people that will be paying for it too, just given the illusion that they’re not paying the differential in increase when in reality they still are anyway.
These national reforms shouldn’t be seen as isolated from one another: by looking at the big picture you will see the singular root of these commodity crises is a systemic cancer. These individual campaigns all build up to a system-wide, sector-wide clamor for large-scale reforms in government. It would be nice if the USC be able to make a comprehensive view on the roots of these crises, since if you will notice, the oil crisis doesn’t have much difference from the rice & other commodities/services crises.
The difference of the oil crisis from the likes of the rice crisis, though, is in the fact that OPEC’s global monopoly is indeed harder to fight.
That doesn’t mean that immediate solutions that will remove the burdens from the shoulders of the people isn’t needed. I assume that this 6-month buffer period is a phase in preparation for a recalibration of policy-planning, where the debate on what long-term solution will be implemented will be resolved. What’s important is to immediately relieve the Filipino people from the present shackles. And you can’t do that by tackling the Oil Price Crisis on the global arena while our fellow Filipinos die because they can no longer afford living.
The point of nationalizing Petron, at the very least, is to ensure that petroleum prices remain priced fairly. Subsidizing it will be according to our nation’s capacity. The big-3 monopoly has amplified the prices through massive padding, and THAT is what’s making oil prices unbearable. Again, the problem of state-run Petron (the same problem with NFA) is the corruption issue. But, it will only remain a problem if the people ceases to be vigilant and partisan in these reforms.
The long-term solution to resolving our dependency on petroleum, as you say, is a completely different avenue of debate.
I agree that none of these crises exist in a vaccum. And yes, for pertinent issues such as this people must remain vigilant (granted that vigilance isn’t violent or destructive). However, the 6-month buffer is not an immediate stopgap measure as of yet but rather a buffer in terms of centralized aquisition of oil and other petroleum products, this is seeing as HouseBill 3030 hasnt been passed yet (atleast the last time I checked). This means that the immediate alleviation you envisioned for ‘dying filipinos’ isn’t attained by this policy either.
Assuming that the ‘big 3′ has been setting monopolistic prices, I don’t think nationalizing the industry is the best answer either. There are other ways of mitigating the aforementioned problems without the harms of centalization and nationalizing key industries. Take for example drafting stricter check and balance mechanisms in checking balancesheets and price-setting practices or closer monitoring of thier business practices and the like. There is a plethora of options that i’m sure the academe has been deliberating over, ones do not present the high risk and harms that nationalizing a key industry entails.
As for the nation’s capacity for subsidy, that capacity isn’t very large. In terms of what the state can afford, it can barely afford to make a dent in the rising price of oil so that amounts to very little (if any) marginal effect. Unfortunately as much as we wish that we will wake up one morning and magically the philippines becomes this wonderful welfare state, it really just doesn’t work that way. Government money has to come from somewhere and unfortunately its coming from the very same people who are grappling with the high oil prices.
[…] with the transport sector, participated in the nationwide transport strike. We released an article-statement and helped organize the picket at Philcoa. We even helped prepare lunch, which was simply monggo […]
I was under the impression that the bills filed aren’t isolated from one another, as mentioned in my previous post. Of course, if you look at a single bill, it will simply get eaten up by the corrupt system. The point in treating a cancer, however, is to remove it completely lest it simply grows back. If you will notice the calls at the end of the statement came as a set. Achieving only one of them is a tactical victory, however to achieve a strategic victory one must obtain the whole package. Dying Filipinos will keep wasting away if their medications only address parts of the disease.
It would be nice to scrutinize the dealings of the oil cartel through checks & balances or whatnot, however as the whole oil industry is completely privatized, nothing else will keep their price increases in check except the invisible market hand that is completely illusory, as it is their monopoly that is dictative, given that every semblance of control the government has has already been, to take from Diosdado Macapagal’s own words, decontrolled.. The cartel’s history of not listening without a fight, as well as the continuously unfettered price hikes of petroleum products are testaments that disprove the belief that these MNC/TNC’s can find compassion in their heart to remain honest with their dealings & pricings.
The last point is the same reasoning government apologists say about education: the “there’s just no budget left for it” spiel. I’m just hoping these assumptions are done keeping in mind the fact that huge amounts of funding still remain misallocated to military & debt servicing instead of on social services. We still haven’t factored in the billions lost in corruption, which are doubly damaging because the dwindling of welfare & development is amplified by the fact that the money, instead of being diverted, gets completely pocketed.
If, then, your contentions with the solutions at hand is that you percieve them unachievable, get this: The problem, as established earlier, is systemic, where the power to institute reforms remain at the top of the triangle that wants to keep things this way. You therefore must address this system lest your isolated solutions per crisis remain chronically in existence. Radical systemic change is in order to enable reforms that the present status quo will never give to the people. The beginning of this change is the removal of the head of the system, by any means necessary. And “by any means necessary” is quite achievable.
[As an aside, criticism should always come with presented alternatives, otherwise it remains unconstructive.]
The point of nationalizing basic industries is to make the national economy more self-sufficient and less dependent (if not fully independent) upon foreign firms. One cannot expect economic relief for our country when the bulk of production and earnings proceed to multinational and trans-national companies that monopolize key industries. While the implementation of a meaningful regulatory scheme and the search for alternative energy resources are much needed, these cannot work on their own and serve as the alternatives to the advocacy of Science & Technology for the People that entails nationalizing basic industries.
It’s a downright crude argument to say that the Philippine government lacks funds for subsidy, when it misappropriates the money it collects from the people with bogus projects. Take for example the ZTE Broadband Deal which involves a $329 million contract signed by the Philippine and Chinese governments, overpriced by about P6 billion in its first proposal and P4 billion on the current contract for implementation (not to mention that the program was to be loaned by the Philippine government to China with interest). There are also the $14 million kickback in the Industrias Metalurgicas Pescarmona Sociedad Anonima (IMPSA) Hydro-electric Power Plant, the P321 million Jose Pidal Bank Account laundered as election money, the overpriced P536 million President Diosdado Macapagal Boulevard, and the P728 million Agriculture Fund for Ginintuang Masaganang Ani used as election campaign funds, among others. Of course, how can the Arroyo Regime afford to make a dent in the Oil Price Hike when its members are busy filling their own pockets with public funds rather than protecting consumers versus astronomic increases in prices during such a crisis?
On a last note, given the high level of distrust and skepticism you have for the government, why would you want to hand over the petroleum industry to them? Wouldn’t that create more opportunity for them to line their own pockets with oil money? Whether the philippines can afford oil subsidies is something that we would have to leave to economists (or atleast people who have access to the actual numbers and formulae) to figure out. But one thing I think is quite sure, it isn’t a good idea to give an already corrupt government another vehicle for corruption - nationalizing the petroleum industry will do just that.
Are you suggesting to topple down the current administration? It is not the “ideal” government and system right? So, maybe you are not mistaken that the system is the predicament and not the use of a decent oil industry that would serve the interests of the majority. We do not just leave this serious matter to your so-called experts because our future is at stake here. And yes, there is no such thing as a bias-free research whether it is a quantitative or qualitative research method. So even if we depend on an economist’s study there will always be that big question—-to whom and for whom does his or her study serve? Let us not be defeatist and please refrain from instigating the belief that this kind of issues are beyond our concern. That is not multi-perspective! ;p