ANOTHER OIL PRICE HIKE, ANOTHER BURDEN
by Gregorio V. Bituin Jr.
The Featinean publication
The oil price hike is not a funny thing. It is like an ebola virus ready to conquer our poor people. Like raindrops falling on our head, the dreaded oil price hike has become a yearly affair. Among its effects are higher cost of living, transportation rates increases, inflation, plus undesirable headaches to low-income generating families, etc.
The three biggest oil companies in the country: Petron, Caltex and Pilipinas Shell, have filed separate petitions to the Energy and Regulatory Board (ERB) last May 25-26 of this year for increasing the price of petroleum products by an average of P1.20/liter. According to them, the Oil Prize Stabilization Fund (OPSF) has been depleted starting the end of May this year. If not properly taken into account, the OPSF will have a projected deficit of P8.781B (Petron estimate) to P10.55B (Caltex estimate). This depletion is due to the withdrawals of these oil companies which resulted from the increase of the price of crude oil (from January to February 1995) and the projected peso depreciation.
The suffering people have no one to blame but the government for the fast depletion of the OPSF. Despite the rollback of oil prices last year, the ERB has approved the P0.33/liter average increase in the oil companies’ profit. Because of this, the government has allowed the oil companies to increase their reimbursements from the OPSF which amounts to about P16.4 million monthly daily or P492 million a month.
Again, last April 5, 1995, the ERB has allowed a P0.21 additional “setback” to the oil companies effective March 1 of this year, which means P10.4 million daily or P1.3B a month in additional withdrawals from the OPSF.
Is this hike a move by the oil companies only to accumulate more profits? We presume it is. By the replenishment of the OPSF, they have the assurance that they can get their outstanding reimbursement claims of about P179.20M thus, having a fund for future reimbursements. Due to the rise of the price of crude oil, the government views a P1 oil price increase as inevitable. According to Energy Sec. Viray, a P0.70/liter across-the-board increase is necessary to raise the POSF to equilibrium level without contribution, withdrawal or increase in prices of imported crude oil.
The cabinet is also studying several options on how the OPF will take form. These are the following: (a) P1.00 increase for all oil products; (b) P0.40 increase for gasoline products, kerosene and diesel oil and P1.50 for fuel oil and LPG; (c) P0.20 increase for gasoline products, kerosene and diesel oil, P2.00 for fuel oil and P1.00 for LPG; (d) P2.50 increase for fuel oil and P1.00 for LPG. Note: P1.00 per kilogram increase in LPG equals a P22.50 increase per tank.
Let’s say that the prices of imported crude oil have been increased already and may rise furthermore, despite the OPSF, which they call as a buffer to protect the people from sudden changes in the oil price. In the first place, the OPSF is not working as a buffer fund to protect our people. But in effect, it is a fund to assure the multinational oil companies of profits and more profits. Abolishing it may result to exploitation by the Shell-Caltex-Petron cartel. It will be so because the OPSF prevents abrupt changes temporarily.
The OPSF may be abolished if Petron is nationalized and reverted to be owned by the government and if the multinational oil companies are Filipinized. The pricing of oil products by a government-owned or controlled Petron may serve as “regulatory” mechanism. The importation of crude oil must be done through a government-owned or controlled corporation as safeguard against the fluctuations of oil prices in the world market. That is to ensure efficient delivery of services and the quality of products for the oil refining domestic market, hauling and dealership may be regulated.
- June 1995, page 16
by Gregorio V. Bituin Jr.
The Featinean publication
The oil price hike is not a funny thing. It is like an ebola virus ready to conquer our poor people. Like raindrops falling on our head, the dreaded oil price hike has become a yearly affair. Among its effects are higher cost of living, transportation rates increases, inflation, plus undesirable headaches to low-income generating families, etc.
The three biggest oil companies in the country: Petron, Caltex and Pilipinas Shell, have filed separate petitions to the Energy and Regulatory Board (ERB) last May 25-26 of this year for increasing the price of petroleum products by an average of P1.20/liter. According to them, the Oil Prize Stabilization Fund (OPSF) has been depleted starting the end of May this year. If not properly taken into account, the OPSF will have a projected deficit of P8.781B (Petron estimate) to P10.55B (Caltex estimate). This depletion is due to the withdrawals of these oil companies which resulted from the increase of the price of crude oil (from January to February 1995) and the projected peso depreciation.
The suffering people have no one to blame but the government for the fast depletion of the OPSF. Despite the rollback of oil prices last year, the ERB has approved the P0.33/liter average increase in the oil companies’ profit. Because of this, the government has allowed the oil companies to increase their reimbursements from the OPSF which amounts to about P16.4 million monthly daily or P492 million a month.
Again, last April 5, 1995, the ERB has allowed a P0.21 additional “setback” to the oil companies effective March 1 of this year, which means P10.4 million daily or P1.3B a month in additional withdrawals from the OPSF.
Is this hike a move by the oil companies only to accumulate more profits? We presume it is. By the replenishment of the OPSF, they have the assurance that they can get their outstanding reimbursement claims of about P179.20M thus, having a fund for future reimbursements. Due to the rise of the price of crude oil, the government views a P1 oil price increase as inevitable. According to Energy Sec. Viray, a P0.70/liter across-the-board increase is necessary to raise the POSF to equilibrium level without contribution, withdrawal or increase in prices of imported crude oil.
The cabinet is also studying several options on how the OPF will take form. These are the following: (a) P1.00 increase for all oil products; (b) P0.40 increase for gasoline products, kerosene and diesel oil and P1.50 for fuel oil and LPG; (c) P0.20 increase for gasoline products, kerosene and diesel oil, P2.00 for fuel oil and P1.00 for LPG; (d) P2.50 increase for fuel oil and P1.00 for LPG. Note: P1.00 per kilogram increase in LPG equals a P22.50 increase per tank.
Let’s say that the prices of imported crude oil have been increased already and may rise furthermore, despite the OPSF, which they call as a buffer to protect the people from sudden changes in the oil price. In the first place, the OPSF is not working as a buffer fund to protect our people. But in effect, it is a fund to assure the multinational oil companies of profits and more profits. Abolishing it may result to exploitation by the Shell-Caltex-Petron cartel. It will be so because the OPSF prevents abrupt changes temporarily.
The OPSF may be abolished if Petron is nationalized and reverted to be owned by the government and if the multinational oil companies are Filipinized. The pricing of oil products by a government-owned or controlled Petron may serve as “regulatory” mechanism. The importation of crude oil must be done through a government-owned or controlled corporation as safeguard against the fluctuations of oil prices in the world market. That is to ensure efficient delivery of services and the quality of products for the oil refining domestic market, hauling and dealership may be regulated.
- June 1995, page 16
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