POSTSCRIPT / September 5, 2000 / Tuesday

By FEDERICO D. PASCUAL JR.

Philippine STAR Columnist

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We’re not that helpless against fuel price hikes

A NUMBER of service stations were set last night to raise their gasoline prices again, soon after President Estrada flew back to the United States to savor the thrill of strutting on the world stage as an alleged statesman.

Erap Estrada is intent on reading a script before the United Nations where every member gets the chance to talk his head off even if hardly anybody listens. But that’s all right, because the assembly is actually a huge psychiatric clinic for Big Boys with complexes and delusions.

Any junketing head of government can get his few minutes at the mike, the polite applause of his peers and a taste of corridor diplomacy where he nods and smiles at people he meets in the UN premises, including the toilet — and comes out in the nippy early autumn air feeling important, and cured.

* * *

TO justify the millions diverted from essential services to the junket, the staff arranges and documents chats with fellow state leaders also looking for some ego massage and the same justification for their own excursions to the Big Apple.

To simulate substance, documents that could be signed by plenipotentiaries (a long word for envoys) are laid out for the President to sign while flashbulbs pop. The pictures are then sent to news networks back home to assure taxpayers that the President is, like our overseas workers, hard at work.

It’s a variation of the usual world conference attended by government officials on the prowl. The official registers for the record, mills around to imbibe the ambiance, poses for souvenir shots, then seeks out more delightful entertainment elsewhere — at taxpayers’ expense. (An assistant stays behind to gather brochures and statements to plagiarize for the required audit report.)

* * *

EVERYTHING that President Estrada wants to do at the UN could very well be done by our permanent representative to the world body. But that diplomatic whirl in New York could be exhilarating, past presidents would tell you. Or intoxicating, if one does not watch out.

The more substantive portion of Mr. Estrada’s trip is the meeting in Honolulu with the Commander-in-Chief of the US forces in the Pacific. The President gets the usual security briefing, then is subtly given his marching orders on his role in the regional scheme of America.

This bit of security updating could be handled normally by our Defense Secretary or our AFP chief of staff, but the US thinks it’s best to apply the pressure directly on the President even if everybody knows that he is just dying to do Uncle Sam’s bidding to ensure his completing his bumpy six years in office.

* * *

SO while Erap Estrada is off traipsing to the world’s capital pretending to help sort out humanity’s cataclysmic issues, here we are grappling with the gut problem of rising prices of fuel and everything else remotely related to oil.

This is not to mention traffic, pollution, garbage, crime and flooding that are sapping the vitality of the nation’s capital, and the Abu Sayyaf moro-moro that is pulling down the entire Republic.

Kung sa bagay, as demonstrated in his previous trips, this country can survive and might even fare better if Erap were not around.

* * *

THE latest increase in gasoline prices underscores again the need for a mechanism for reining in the greed of the oil cartel. With deregulation, the government has abdicated theoretically its inherent powers to influence the price of such a strategic item as fuel.

Until now, there is no feasible plan presented to keep in check the oil companies except the National Oil Exchange (OilEx) as proposed in a bill filed principally by Bataan Rep. Enrique T. Garcia.

Put simply, the non-profit OilEx would secure the nation’s total fuel requirements though global bidding and negotiation to get the lowest possible offer from the world’s refineries and traders, including the three refineries in the country. It would sell the fuel with only the cost of operations added to the landed cost.

The oil firms are naturally fighting the OilEx idea tooth and nail, because the lowering of prices through global bidding would expose their rapacious forcing of overpriced gasoline on captive consumers.

* * *

THE oil cartel has been spreading the lie that the OilEx would set back deregulation of the fuel market. On the contrary, the OilEx would speed up deregulation.

Deregulation aims to level the field and attract more players so that in the interplay of market forces, in the heat of competition, reasonably low prices would emerge.

The OilEx would do exactly that, since it would remove the stranglehold of the Big 3 on the fuel market and open it to some 40 refineries and traders participating in the electronic bidding and whose offers are made in full view of everybody.

Sad to say, the few small players that came with deregulation have failed to foil the monopolistic pricing of the giants. In fact, the new players have found it to their interest to generally follow the Big 3’s rates and make money by also raising their prices.

* * *

IT is not true that the oil companies would close their refineries, and abandon their huge investments just like that, if the OilEx is established. That’s a crude bluff.

It would be an unsound business decision for the Big 3 to pull out their refineries out of pique. The better option is to lower costs and moderate prices to be able to compete in the global bidding of the OilEx.

After all, the local refineries have the pivotal advantage of being located here. They are therefore not saddled with the additional cost of transporting their oil products.

Even assuming the unlikely possibility that foreign-owned Shell and Caltex would close their refineries, there is still Petron the market leader that is effectively controlled by the Philippine government despite the 40-percent presence of Saudi interests. The government will not cut off its left arm to spite the other arm.

* * *

EVEN now, Petron is able to play a moderating influence on Shell and Caltex. Whenever the two foreign oil firms hanker for price increases beyond one peso per liter, Petron would drag its feet and suggest cutting the increase by as much as half.

Being in business itself, Petron would normally want to maximize profits, but political decisions emanating from Malacañang have to be made and Petron management has to carry out the wishes of the politicians running the show.

Shell and Caltex cannot ignore Petron, which controls some 44 percent of the market, when, for instance, it opts for only a 55-centavos increase instead of the P1.20 per liter that Shell and Caltex want.

If Shell and Caltex carry out their empty threat to close their refineries, let them. That would be good for Petron, and the OilEx working in tandem.

* * *

THE new players should be ready to walk away from the shadow of the Big 3 and stop mouthing the propaganda of the oil giants.

The reality is that except for Coastal, which has stolen a march on the big oil depots in Subic, the new players are just a minuscule dot in the fuel market. They do not count. Their sales do not influence the supposedly deregulated market.

No wonder they just follow the lead of the giants and price their products a few negligible centavos lower. This feeble underpricing of the new players has not posed any effective competition, so what’s the point?

On the other hand, with the OilEx securing cheaper fuel and managing the distribution, the new players will be dealing directly with the source (OilEx) and have a better chance of competing with the older networks of the Big 3.

The cheaper OilEx products carrying the new exchange’s own brands will flood the market and the new players will become part of a bigger nationwide network and stop being poor relations of the Big 3.

* * *

BUT the OilEx concept has not been tried and proved anywhere in the world, the propagandists of the Big 3 scream.

That’s true. But that is not a cogent reason to reject it as unworkable. There is always a first, especially for an idea whose time has come.

In fact, the OilEx could be a model for other non-oil producing countries and big consumers. With some modifications to suit unique situations, this Filipino formula could be rewritten and used to great advantage by those who seek liberation from the price manipulation of the oil giants.

The OilEx bill is admittedly not perfect – like all measures introduced in Congress before they pass through the crucible of legislative debate. With the collective wisdom of all sectors, the idea could be further refined and strengthened.

* * *

SINCE the prices of oil products affect a broad range of essential items, more people should speak out in favor of an agency seeking to put an end to arbitrary and oppressive price increases.

Take the latest price hike. They are suddenly jacking up prices because of the rise in the price of crude oil. But the more expensive crude will not be here until more than a month. How come they are already raising prices?

The oil companies have the bad habit of immediately raising pump prices with the slight upward movement of crude prices, but they delay lowering (if ever) their prices when the world oil price goes down.

We’ve been at the mercy of the insatiable oil giants for too long. Now that we have the OilEx to stop the greed and the manipulation, let’s do it!

* * *

(First published in the Philippine STAR of September 5, 2000)

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