Arroyo’s oil-price control a publicity stunt, cries Ibon

MANILA — Amid the uproar over the Malacañang-imposed oil price ceiling, Executive Order (EO) 389 is apparently a mere government public relations gimmick.

EO 389 will not really help the greatest number and most needy of typhoon victims. The worst hit is from the poorest income groups who are not consumers of petroleum products at the pump level. It is also not clear how prices of the basic goods that they consume and of the products they need for reconstruction and rehabilitation will be lowered as a consequence.

The short-term effect of EO 839 is as intended and pegs prices at their mid-October levels. There is unlikely to be any long-term effect on oil prices even if the oil firms claim that it gives a perception that the country lacks stability and protection for investors.

In times of calamity, the regulation of the oil industry is fully justified including setting price controls. However EO 389 appears to be mainly a public relations exercise to divert attention from government’s culpability in the human disasters wrought by the recent typhoon-driven calamities. It also appears to be an attempt to correct government’s image as unduly siding with the big oil firms at the expense of the Filipino public.

In truth, the government is faced with a problem of its own making. It is having difficulty exercising responsible control of pump prices because of oil industry deregulation and as well as the sale of its shares in Petron. The oil cartel, in turn, has been given the legal and economic leverage to assert their monopoly control.

The big oil firms are certainly not being driven to any real financial difficulties or bankruptcy. They have over a decade of overpricing and accumulated superprofits and are just muscle-flexing now to show that they will not tolerate encroachment into their monopoly power over the industry.

Moreover, it is likely that the oil firms will only pad their pump prices once the price controls are lifted to make up for their lost accustomed superprofits.

The government will likely lift price controls soon on the pretext that they are no longer needed, but it has projected the false image that it will stand up to the oil firms if necessary—even if it is really the public that bears the burden of monopoly pricing and government neglect.

This episode underscores the urgent need for real public transparency about oil pricing and inventories. More than this, it highlights the continuing relevance of repealing Republic Act No. 8479 or the downstream oil deregulation act, and instituting responsible government regulation of the oil industry.