Oil price hikes continue to erode income of drivers

Published on July 20, 2011

Comparing the local oil prices to that in other countries in the past years, Piston said the local pump prices have risen far more than the amount necessitated by price movements abroad and the peso-dollar exchange rate. The transport group continues to accuse the oil companies of overpricing oil products by “an average at least of P7.50 ($0.17) per liter.”

By MARYA SALAMAT
Bulatlat.com

MANILA – A day after public transport drivers from Southern Tagalog drove a caravan to Makati City in Metro Manila and protested the latest rounds of price hikes at the headquarters of the three biggest oil companies operating in the Philippines, the Manila chapters of PISTON also held a protest caravan targeting “the biggest and the fastest to raise rates” among the so-called Big Three.

The Makati City headquarters of the local subsidiary of multinational Royal Dutch Shell, the Pilipinas Shell, was the destination Tuesday of the jeepney and FX taxi drivers who “sacrificed their day’s earnings as drivers” to join the protest caravan against oil price hikes. Their caravan began at the Quezon Memorial Circle in Quezon City, passed by Quezon Avenue, turned left at Edsa, then right at Buendia and then left again to Paseo de Roxas in Makati City toward the headquarters of Pilipinas Shell.

Pilipinas Shell had been the first to announce a new round of increases in oil products, said Modesto Floranda, president of Piston chapter in the National Capital Region. The price of diesel was increased midnight of Tuesday, led by Shell, by at least P1.10 ($0.03) per liter while gasoline was increased by P0.30.

Piston members decry Aquino’s “softness for the greedy oil companies”. (Photo by Marya Salamat / bulatlat.com)

This latest round of price hikes raised the diesel prices from P32 ($0.74) per liter at the start of the administration of President Benigno “Noynoy” Aquino to as much as P48 ($1.11) today, a year after he took power and promised change in the lives of ordinary Filipinos. Drivers complained that oil price hikes have drastically reduced their whole day’s earnings.

According to Piston, the increases since Aquino took power caused jeepney drivers to lose P480 ($11.15) per day in using up to 30liters of diesel, while tricycle drivers lose up to P64 ($1.49) per day. While the government turns down petitions for fare hikes, it is the drivers who are thus being forced to subsidize the cost of the oil price hikes. Drivers particularly those from Piston are urging the public more to support their calls for an oil price rollback and the scrapping of the oil deregulation law, the law they blamed for unmitigated oil overpricing.

Although the Aquino government has freely allowed oil companies to raise pump prices while they barely allowed fare hikes, the public is still not spared from the impact of oil price hikes. Piston noted in their statement that prices of goods such as all foodstuff, rice, fertilizers and electricity— goods that consume oil in transportation or production or both— have also increased.

“The country’s drivers are furious over these oil price hikes,” Floranda said, adding that “When oil companies raise prices they raised it big and quick. When they roll back prices, they do so extremely slowly and in pitifully small amounts.”

Excessive profits at the expense of the poor

Piston belied the excuses of the oil companies for the oil price hikes. “It is not true that it is simply because local pump prices are dependent on prices in the world market,” said Piston in a statement. Comparing the local oil prices to that in other countries in the past years, Piston said they discovered that the local pump prices have risen far more than the amount necessitated by price movements abroad and the peso-dollar exchange rate. The transport group continues to accuse the oil companies of overpricing oil products by “an average at least of P7.50 ($0.17) per liter.”

The transport group highlighted the ballooning profits of Pilipinas Shell from 2001 to 2008, which increased from P3.1billion to P19billion (from $72m to $441m), and in 2009 P16 billion ($371m). In nine, years, PISTON noted that the profits of the local subsidiary of Shell amounted to P73billion ($1.7b).

Piston members preparing to leave for a protest caravan to headquarters of oil companies on Jul 19. (Photos by Marya Salamat / bulatlat.com)

Chevron, another multinational oil company operating in the Philippines, raked in P40.2billion ($9.3b) in profits from 2001 to 2009, as its P1billion ($23.2m) profit in 2001 ballooned to almost P11billion ($255.4m) in 2007, and P8.3billion ($192.7m) in 2009. Petron’s profits also increased though not as dramatically huge as Shell. Petron’s profits rose from P1.2billion in 2001 to P6.1billion ($27.9m to $142m) in 2007. In just the first nine months of 2010, Petron reportedly raked in P5.4billion ($125m) in profit.

In a study of Ibon Philippines, a non-profit economic think-tank, they noted that the profits of Pilipinas Shell’s mother company grew from $10.9 billion in 2001 to $26.3billion in 2008 and $20.1billion in 2010. Its total profits from 2001 to 2010 amounted to $192 billion, exceeding the economy of the Philippines, which is valued at $189billion in 2010.

Government’s share in the profits

George San Mateo, secretary-general of Piston, charged that the Aquino government is not that interested in holding back the greed for profits of Shell, Caltex and Petron through overpricing. This, he explained, is because the government takes a bigger slice of the profits with the higher oil prices, through the 12-percent value added tax on oil. PISTON and other progressive peoples’ organizations have a long-standing demand for scrapping the VAT on oil products. With the spiking prices of oil products, Piston said, since 2006, the government has been taking an average of P48-billion yearly from the VAT on oil.

In a P45 ($1.04) a liter of diesel, for example, the government’s VAT would be more than P5 ($0.12) per liter, or more than P150 ($3.6) per 30 liters of a driver’s average consumption in a single day. With the latest prices at P48 ($1.11), the VAT on oil would rise to P5.76 ($0.13), or P173 ($4.02) per driver’s consumption of 30 liters.

Piston said the billions worth of total VAT on oil are one of the big reasons why the Aquino government could not reverse the Oil Deregulation Law that gives the oil companies license to freely tinker with oil prices. San Mateo criticized the very meager “aid” extended by the Aquino government to Filipinos at the height of a strong nationwide protest against the oil deregulation law last March 31. The protesters were calling for a suspension of the VAT while reviewing the oil deregulation law.

Nothing has changed under Aquino, said San Mateo. He said drivers fear that at the rate the Aquino government is giving free rein to oil price increases, “even doing the role of spokesperson for the oil companies,” pump prices may again peak at P51 ($1.18) per liter of diesel and P61 ($1.42) per liter of gasoline. This happened under former president Arroyo in 2008. “Worse, the price hikes may even exceed that,” San Mateo warned.

He urged the country’s drivers to support PISTON’s protests against the oil price hikes and the oil deregulation law. “We urge everybody to join us in airing the real state of the nation on Jul 25,” San Mateo said.

Before that, on July 20, Piston will hold a “People’s Protest” cum transport strike. The transport strike would be led by the regional chapter of Pinag-isang Samahan ng mga Tsuper at Operator Nationwide (PISTON) in Southern Tagalog, the STARTER-Piston, and the Bagong Alyansang Makabayan-Southern Tagalog. In other places in the country there would be varying levels of people’s protests, said San Mateo. He said the Transmission-Piston in Davao has also announced its buildup protests for another transport strike.

2 Responses to “Oil price hikes continue to erode income of drivers”

Albert Says:
July 20th, 2011 at 5:36 pm
PNOY is doing well. It is just that the president cannot kill the crocs in 1 year. He has 5 years left. So let us give it to him and judge after his term
Davao Housing Says:
July 20th, 2011 at 5:41 pm
In the real estate developer’s perspective, PNOY doesn’t really give his best in terms of providing better ways to promote real estate as one of the player in the philippine economy.

PNOY should also into consideration in making us developers feel that Philippine Land is not for VILLAR alone.