POSTSCRIPT / January 11, 2000 / Tuesday


Philippine STAR Columnist

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Erap bats for OilEx to lower prices of fuel

AS the smoke of the Cabinet revamp settles, we discern what looks like an honest search by President Estrada for solutions to serious national problems that have dragged down his administration in the polling game.

One such negative item was the seeming helplessness of the Estrada administration in stopping the local oil cartel’s rapacious increases in the retail prices of their petroleum products.

President Estrada has endorsed the speedy establishment of a national oil exchange (OilEx) that will buy cheaper gasoline, diesel, kerosene and other finished oil products — not crude oil still to be refined — directly from lowest bidders in the world market.

The revolutionary plan, put together by Bataan Rep. Enrique T. Garcia, will bypass refineries of the Big Three (Shell, Petron and Caltex) in the procurement of oil products — if they cannot beat the lowest price of other refineries and traders abroad.

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WITH only the OilEx buying finished oil products from lowest bidders throughout the world, retail prices are expected to stabilize at comparatively lower levels and the stranglehold of the local oil cartel broken.

Seeing in Garcia’s proposed OilEx a dramatic relief from high prices, President Estrada told the congressman in a meeting in Malacañang last Friday that he would certify to Congress the urgency of the bill (HB 8710) creating the agency.

With his net approval rating having plunged to just five percent in the last (December) surveys, President Estrada was described by aides as dead set on finding solutions to problems that had contributed to his waning popularity.

As he pedaled back, President Estrada also shelved his controversial plan to amend the Constitution to attract foreign investors. Widespread resistance to charter change at this time was registered in the surveys.

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ANOTHER indication that Mr. Estrada means business is the appointment of former Manila Mayor Alfredo Lim, his former rival in the last presidential elections, to the politically sensitive post of secretary of the interior and local government to replace Ronaldo Puno who is being sent to the United Nations.

(Although Puno would carry the rank of ambassador, it is awkward to refer to him as the incoming “ambassador to the UN” as that world body is not a sovereign state. The proper term is “permanent representative to the UN.”)

Palace sources said that Mr. Estrada appointed Lim over the vehement objections of several party stalwarts, including Laguna Gov. Joey Lina, Manila Mayor Lito Atienza and Agriculture Secretary Edgardo Angara.

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A KNOWN no-nonsense enforcer, Lim will play the unusual role of overseeing local government executives who were mostly on the other side of the political fence during the last national election battling Lim’s forces.

Many party mates of Mr. Estrada are not comfortable with the unusual setup, but he is insisting on it. His aides explain that he is bent on getting “the right people for the right posts” regardless of their political color.

They added that other ranking officials with lackluster performance have been marked for removal, but that the President has been having a hard time looking for suitable replacements.

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THE oil companies and their friends in positions of power are expected to go all out to defeat the Garcia bill creating the OilEx. In the Senate, meanwhile, a counterpart measure has been filed by Sen. Juan Ponce Enrile.

With Mr. Estrada bullish on the OilEx plan, and with his known bullheadedness when a bright idea strikes him, he is expected to keep pushing until the oil exchange is operational.

Oil is a strategic item in the economy as the price of oil products impacts on practically all goods and services down to the grassroots. If allowed to spiral under deregulation, oil prices can derail an administration and even topple a government.

As the administration musters support for the OilEx from a public battered by high prices, the oil cartel might have a difficult time blocking its establishment despite its clout in all three branches of the government.

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THE President was reported to have asked in his meeting with Garcia why it was only now that this solution to runaway oil prices was broached to him. The papers were actually sent to his office late last year, but they apparently got lost.

Garcia said the OilEx was inspired by the innovative California scheme of breaking up the power industry and buying electricity from lowest bidders in and around the state. From whatever source, the electricity flows through the same fixed cables.

The OilEx is also similar to a plan in Congress to break up the local power industry into its various stages of generation and distribution and buying power from the lowest bidder connected to the national grid.

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BUT the scheme for power is more complicated since electricity cannot be stored and sourced from generators that are too far. On the other hand, gasoline and other finished oil products can be imported from distant sources and stored – making the OilEx a more manageable mechanism.

This appears to be the first time that the national exchange concept as applied to oil products is to be tried anywhere. If it proves effective, other countries may just copy it or adopt variations of it.

The Big Three will have to shave their refining and other costs – and participate in the open bidding – if they want to compete and survive. Their imperious days of dictating prices on captive consumers are apparently numbered.

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NOW, we report on our recent survey on how Postscript readers would respond to the poser: What are the three main reasons for the drop to five percent of the net approval rating of President Estrada in the latest survey of the Social Weather Stations?

The last minute arrival of bunched responses brought back “the critical press” to the third position (11 percent) among the top three reasons. Coincidentally, President Estrada himself had blamed the press – together with the Church and the political opposition –for his waning popularity.

The bulk (95 percent) of the responses came via email, with the rest by fax, postal mail and hand-delivery.

Since not everybody uses computers, much less email, we do not claim that the respondents represented a true cross-section of the adult population. We have to clarify also that only Postscript readers here and abroad were involved.

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THE top three reasons given by Postscript readers for the drop in Mr. Estrada’s poll rating were:

  1. Erap not ready for the presidency/ Mismanagement/ Incompetence – 18 percent of responses.
  2. Cronyism/influence-peddling by relatives – 15 percent.
  3. Unfair criticisms by media – 11 percent.

The other reasons given in descending order of recurrence in the responses: Proposed Constitutional changes (Concord), 10 percent; broken presidential promises, 8; bungling Cabinet men, advisers, barkada , 7; Urong-sulong , fickle-mindedness, yoyo decisions, 7; graft and corruption, 6; Church attacks on Erap, 4; and attacks from the Left and Right (including opposition and former officials), 4 percent.

We will publish next time choice comments of some of the respondents.

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(First published in the Philippine STAR of January 11, 2000)

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