For Oil Firms, EO 839 Is Not Just About Dip in Profits but Potential Shift Vs. Deregulation

Published on November 13, 2009

By ARNOLD PADILLA
Analysis
Bulatlat.com

MANILA — The big oil players have put their conflict with Malacañang over Executive Order No. 839 to a higher plane through legal maneuver and economic sabotage. The legal move came in the form of a Pilipinas Shell petition before a Makati trial court asking for a temporary restraining order on the controversial directive. Meanwhile, the economic sabotage came in the form of deliberate restriction on supply that resulted in some pump stations temporarily closing down or reducing service hours.

It must be emphasized that for the oil companies, especially major players Shell, Petron Corporation, Chevron Philippines (Caltex), and Total Philippines, what is at stake in the debate on EO 839 is not the profitability or viability of the industry. The order did not make a dent at all on the huge profits that these oil firms make because they have been overpricing the public and profiteering through monopoly control. When EO 839 came out last Oct. 20, petroleum products in the country were overpriced by around P5.48 per liter at the pump stations.

What the oil companies are more concerned about, which is the bigger issue surrounding the EO, is that despite its inherent limitations in terms of truly protecting in a sustainable manner the interests of oil consumers, the order has provided a glimpse of what the state can do if it is serious enough and has the political will to stand for public welfare.

Defensive Oil Industry

Because it was pursued in the framework of deregulation, EO 839 itself did not protect consumers but simply passed on the burden to consumers in the Visayas and Mindanao, where oil prices have been raised to offset the supposed losses of the oil firms due to the order and where pump prices have been historically higher than in Luzon.

To a certain degree, however, it questioned the lies long peddled by the oil companies and staunch defenders of neoliberalism about neoliberal free market economics. If left unchallenged, EO 839 could become a precedent in policy making – that the government, in the name of public good and welfare, could take decisive action against abusive corporations.

The defensiveness of the oil industry should be viewed as well in the context of the aftermath of the global financial and economic crisis, which saw deregulation and neoliberalism being increasingly challenged and questioned in policy circles.

Populist Ploy

Malacañang, of course, has its own vested, narrow political interest in issuing EO 839. Reeling from strong criticisms for its response — or lack of it — to the onslaught of typhoons Ondoy and Pepeng, and lacking in any popular platform that it could ride on until the 2010 elections, it has taken on the advocacy of oil prices.

But because the move is simply a populist ploy to encourage support for an increasingly unpopular and isolated regime, it will reach its natural limits. Indeed, the recent pronouncements of Energy Secretary Angelo Reyes about an impending shortage in oil supply (echoing the oil industry’s propaganda) as well as Justice Secretary Agnes Devanadera’s statement that the oil-price freeze may be lifted in selected areas indicate that Malacañang has given in to the pressure from the oil companies.

Beyond EO 839

Nonetheless, consumer advocates and campaigners must seize the opportunity provided by the EO 839 controversy and raise the debate to the level of the deregulation policy itself. Several lawmakers, including veteran senators Aquilino Pimentel Jr., Miriam Santiago and Juan Ponce Enrile, have indicated that a government takeover of the oil industry is a legitimate option for the state in order to protect the public.

They have also encouraged direct government importation and control of facilities up to the retail networks or pump stations. Anti-deregulation advocates have long pushed for these policy reforms and they are being affirmed today in the light of the controversy over EO 839.

The immediate challenge now is how to carry on the momentum against oil deregulation beyond EO 839, which will soon be lifted, and how recent pronouncements by several legislators can be translated into actual policy reforms. As national candidates and political groups start to position themselves for 2010, it may be worthwhile to engage them on the recurring issue of oil prices and deregulation. (Bulatlat.com)