Avaricious oil firms suck in more blood
NOT content with their recent series of price increases that sucked in P59.7 million in additional earnings per day, the Big Three are again poised to jack up shortly the price of their oil products.
The projected increase is reportedly an average of 12 centavos per liter, but sources said it could rise to almost 50 centavos.
To stop the impending new increases, Bataan Rep. Enrique Garcia filed Wednesday (June 16) with the Supreme Court another petition for a temporary restraining order while the main case on the deregulation of the oil industry is being studied by the high court.
Data from IBON Foundation Inc., an independent research think-tank, show that since April 21, Petron, Shell and Caltex have been raking in additional earnings of P59.7 million a day, or P2.48 million per hour, just from their recent price increases.
These figures of IBON were based on the three oil firms’ market share and the projected consumption of 65 million liters per day for this year.
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BUT what is a 12-centavo increase, ask some people who have been conditioned to these seemingly inevitable movement in oil prices.
That’s just the scary point. By dropping price increases into the people’s throat in small doses, the oil companies are able to get away with it. The oil firms stagger the increases over a period, each increase being around 50 centavos or some amount that’s always less than a peso.
The people, some of whom have been conditioned to the hard facts of life, soon get inured to a seemingly tolerable 50-centavo/liter markup without realizing the devastating cumulative and long-range effects on other goods and the entire economy.
From April 21 to May 29, or a period of five weeks, the staggered small increases imposed by the Big Three had added up to 99 centavos/liter in the case of market leader Petron, P88/liter for Shell; and P14.9/liter for Caltex.
Note that they made sure that if the price increases were added up, they would fall a few centavos shy of one peso. An increase of more than one peso could be shocking to many people, but 50 centavos could appear harmless.
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DURING the same five-week period, the three companies amassed close to P60 million in additional earnings per day from the price increases.
If they ignore the buildup of resentment over their avaricious overpricing and push through with the planned 12-centavos/liter increase, the major oil firms will rake in an additional P7.5 million per day, according to computations made by IBON.
When will all this end? Who in government is supposed to look after the mahihirap (who comprise more than half of the population), whose interest is allegedly the focus of the Estrada administration?
If government cannot rein in the greedy oil firms, it better say so right away—so the people would know that they would have to fend for themselves and take up their own remedial measures.
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CONGRESSMAN Garcia is still doing a yeoman’s job of exposing and instituting court action against exploitative marketing strategies of the oil firms, but he appears puny before the well-entrenched oligopoly. (It was the Supreme Court itself that called them an oligopoly.)
President Estrada talks of wanting to amend the Constitution. Before he tampers with the charter, we ask him to read first Section 4, Article II, which says: “The prime duty of the government is to serve and protect the people.”
There must be some way of drumming this basic policy into the heads, and hearts, of all government officials because government “service” appears to have been prostituted into one big business for most politicians.
Under such ethic, those who have the most money – like the oil oligopoly, giant public utilities and other big businesses with bulging money vaults – are able to sway government officials more effectively than the penniless, therefore voiceless, masses.
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IBON chief editor Danny Arao, who gave us the data on the oil firms, has more information to help give a clearer picture of the giant oil firms that continue to wring the last drop from captive consumers:
Overpricing of oil products from January to December last year, gave the oil firms P1.69 billion in extra earnings, with the Big Three hogging the pile at P720 million for Petron, P551 million for Shell and P414 million for Caltex.
The oil firms were able to score additional profits by prematurely jacking up their prices even while refining crude bought earlier at lower prices. It’s strange that the Bureau of Internal Revenue has not slapped them with windfall taxes.
Last year, the Big Three reported profits amounting to P6.4 billion, a dramatic rebound from their P4.5-billion losses in 1997. Their best year was 1994 when they chalked up P9 billion in profits, followed by P7.5 billion in 1996 and P6.8 billion in 1995.
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THE market rules under the deregulation law are still stacked up in favor of the big oil firms with refineries in the country. This is not surprising since they have the most formidable lobby in Congress.
Deregulation has brought in a few oil merchants outside of the Big Three, but their share in retail (gas station) business is negligible.
A footnote would be Coastal, which had the foresight to secure the giant fuel depot abandoned by the US Navy in Subic. Congressman Garcia says that Subic’s capacity is about 25 percent of the total national inventory.
Coastal is able to maintain substantial stock (refined products) and might even join the Big Three. Right now, the bulk of its sale is not through gas stations but to big bulk users.
Petron enjoys a 40-percent market share, while Shell and Caltex have 34 percent and 23 percent market share, respectively, according to IBON figures. Other industry players have only a 3-percent market share.
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IN his urgent plea before the Supreme Court, congressman Garcia says that the oil oligopoly “is able to constantly overprice because of the arbitrary and premature lifting of price control by Section 19 of RA 8479 (oil deregulation law),” which he said is “a blatant and shameless violation” of the Constitution mandating the regulation of monopolies (or oligopolies).
He said that the supposed price control in RA 8479 is “illusory and inutile” because it entails a slow, complicated process of monitoring data submitted by the oil firms and other records compiled by the government.
Overpricing of oil products, he said, is worse than the hoarding of cereals, because the overpricing of gasoline and other oil products affects all other products, including basic goods, resulting in added financial burden to the people.
Another fuel price increase at this time, he said, “is a potent destabilizing factor, because it will certainly aggravate the socio-economic situation when the country is still trying to recover from economic and financial crisis.”