Analysis

Gov’t Deceives Filipinos on Oil Price Hikes, Deregulation
52 oil price hikes since 1996

There is deception as government withholds vital information on the downstream oil industry, offering only promises that steps are being taken to mitigate the impact of oil price hikes. The government’s handling of this situation is reflective of statements made in relation to, say, the violent dispersal of protesters last April 7 in Manila. Answers lead to more questions as important questions are not properly answered.

BY DANILO ARAÑA ARAO
Bulatlat

Government pronouncements tend to deceive rather than enlighten and the people, as a result, get more confused as questions are not properly answered and as official answers engender more questions.

There was an apparent inconsistency in the statements of government officials, for example, on last week’s arrangements that went with the chartered flight of President Gloria Macapagal-Arroyo to Rome to attend the burial of Pope John Paul II. The police, for their part, initially denied the violent dispersal last April 7 of cause-oriented groups in Manila protesting political repression but later admitted that scores were hurt because protesters became unruly. In a 335-slide presentation titled “Knowing the Enemy,” the military meanwhile denied that cause-oriented and media groups were called enemies of the state but admitted that some individuals including media practitioners are being monitored on suspicion that they have links with the Communist Party of the Philippines (CPP).

The issues of oil price hikes and oil deregulation prove to be no exception.

Last week, oil companies increased the pump prices of diesel and gasoline by P0.50 per liter ($0.01, based on an exchange rate of P54.57 per U.S. dollar) while liquefied petroleum gas (LPG) was hiked by P11 ($0.20) for every 11-kilogram cylinder. No less than the government admitted that this hike will not be the last as crude oil prices continue to increase.

Even then, the Macapagal-Arroyo administration offers some hope for relief among consumers. The Department of Energy (DoE) stressed that the administration is open to rolling back the tariff on imported crude oil and refined petroleum products from five percent to three percent. This is on the condition, however, that Congress passes the bill to reform the value-added tax (VAT).

Oil tariff increase

Last January, the government decided to increase the oil tariff from three percent to five percent as a temporary revenue-generating measure. At that time, the government promised to restore the tariff to three percent once a bill raising specific taxes by as much as P2 per liter on petroleum products was approved. The latter, however, did not push through due to opposition by cause-oriented groups and concerned legislators. However, there is a possibility that petroleum products will be covered by the VAT, based on proposals by pro-administration legislators.

Section 6 of Republic Act No. 8479 (Downstream Oil Deregulation Act of 1998) states that “a single and uniform tariff duty shall be imposed and collected both on imported crude oil and imported refined petroleum products at the rate of three percent.” The President, however, is allowed to “reduce such tariff rate when in his (or her) judgment such reduction is warranted.” The adjustment of the tariff rate may begin on January 1, 2004 or “upon implementation of the Uniform Tariff Program under the World Trade Organization and ASEAN Free Trade Area commitments.” The tariff will then be automatically adjusted “to the appropriate level notwithstanding the provisions under this Section.”

The government did not disclose that the objective of this section in RA 8479 is to eventually reduce the tariff rate, especially considering that the WTO and other trade bodies are pushing for either reduced tariff rates or a zero-tariff regime. That the government decided to increase the tariff of imported crude oil and refined petroleum products is simply an act of desperation which also gave an opportunity for oil companies to increase prices of locally-sold petroleum products at that time.

52 rounds of hikes

In its research, IBON Foundation, an independent think tank, stressed that from the start of oil deregulation in April 1996 (under Republic Act No. 8180 which was eventually declared unconstitutional by the Supreme Court in November 1997) to March 2005, there were 52 rounds of oil price hikes, “compared to only 23 rounds” from January 1971 to March 1996 when there was a “semblance of regulation” on the downstream oil industry. (IBON said that 1995 was not included as it had no data on oil price movements.)

It is not surprising that groups like IBON and Kontra Kartel (A Movement of Citizens Against Oil Cartel and Oil Deregulation Law) are pushing for the scrapping of the tariff of imported crude oil and refined petroleum products, as well as specific taxes on locally-sold petroleum products. Its call, however, does not end there as the scrapping of RA 8479 is continually raised and the consequent nationalization of the downstream oil industry is pushed.

The government, at this point, prefers to engage in policy measures like the setting up of a review panel to study the impact of oil deregulation and encouraging oil firms to provide discounts on the sale of diesel to jeepney drivers. Just like the state of affairs in the political arena, the government is indeed trying to condition the minds of the people to accept as a given the deregulation of the downstream oil industry.

Its failure to properly answer questions being raised by the people will eventually not just result in even more questions in the near future, but also in more mass actions to expose the failure of deregulation. Bulatlat

BACK TO TOP ■  PRINTER-FRIENDLY VERSION  ■   COMMENT

© 2004 Bulatlat ■  Alipato Publications

Permission is granted to reprint or redistribute this article, provided its author/s and Bulatlat are properly credited and notified.