[asia-apec 1098] Bayan slams oil price hike

[BAYAN]

Government earns a lot from increased oil prices --- IBON

By Danilo A. Arao

The recent oil price hike has benefited not only the oil companies but also 
the Estrada government. 

IBON computations show that for every peso a jeepney driver shells out in 
buying diesel, government gets 20 centavos. 

The government also pockets 47 centavos for every peso a fisherfolk pays 
for regular gasoline. 

And as an urban poor buys kerosene, government gets nine centavos for every 
peso he or she gives to the retailer.

Given that the country consumes about 60 million liters of oil per day, the 
government imposes varying specific taxes on oil products. Using Petron's 
current pump prices, the taxes range from 9% (kerosene) to 47% (regular 
gasoline).

For the first six months of 1998, taxes on petroleum products already 
amounted to P15.6 billion.

IBON computations show that the government stands to earn P71.3 million 
everyday from the taxes on premium, regular gasoline, diesel and kerosene. 
The four petroleum products already constitute 48% of total oil consumption.
Allowing and defending the recent oil price hike, therefore, becomes 
beneficial to the government. 

Indeed, the oil industry has become a milking cow as the oil firms earn 
more and give government its share of the loot in the form of taxes.

OIL PRICE HIKE: WHAT'S IN IT FOR GOVERNMENT?

New Pump Prices a/ Taxes % share 
(peso per liter) (peso per liter)

Premium 12.04 5.35 44% 
Unleaded 11.69 - - 
Regular Gas 10.29 4.80 47% 
Diesel 8.34 1.65 20% 
Kerosene 7.00 0.60 9%

a/ Petron's pump prices as of April 21, 1999. Its prices were used as 
reference since Petron has the biggest market share of 42 %.

Source of basic data: Department of Energy 

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MEDIA RELEASE 
21 April 1999 
 
Bayan slams oil price hike 
Unjust in the light of P1.7 billion overpricing last year 
 
BAYAN (New Patriotic Alliance) today expressed outrage over the 50-centavo
oil 
price hike announced by Caltex saying that the three oil giants have
overpriced consumers by P1.7 billion from January to December last year. 
 
“Calling an oil price increase is simply unreasonable in the light of the
P1.7 
billion the oil cartel raked in through overpricing last year,” said Teodoro 
Casiño, Bayan Deputy Secretary General. 
 
“When no one was looking, the oil cartel had been busy manipulating their 
accounts, lowering prices much less than they should have. Now that they 
are raising prices, they are pointing at the series of price reductions
they enforced since October last year but they are conspicuously silent as
to how much profits they made last year,” said Casiño. 
 
The combined profits of the three members of the oil cartel, Petron, Shell
and 
Caltex increased by a whooping 1,060% from January to December last year.
From 
their “reported losses” of P4.5 billion in 1997, their combined earnings 
reached to P6.1 billion in 1998. 
 
Based on computations made by IBON Foundation, the three oil firms overpriced 
their products by P1.7 billion last year. Of this amount, P720 million, P551 
million, and P414 million were accounted for by Petron, Shell and Caltex 
respectively. 
 
Casiño said the incredible increase in profits is due to the full
deregulation 
of the oil industry last year. Republic Act 8479, he said, is no different
from the old deregulation law that gave the oil cartel absolute freedom in 
overpricing consumers. The Supreme Court struck down RA 8180 as 
unconstitutional in November 1997. 
 
“The oil cartel can now freely dictate prices without the hassle of a public 
hearing and the intervention of a pseudo-regulatory body like the Energy 
Regulatory Board. It is now perfectly legal to jack up prices and earn more
than the previously maximum allowable 12% rate of return base (RORB),” said
Casiño. 
 
IBON estimates also showed that the series of oil price rollbacks were not 
substantial based on the reduction of crude oil world prices and the 
strengthening of the peso vis a vis the dollar. 
 
“The Big Three are still overpricing their products even as they claim that 
they were rolling back prices,” he added. 
 
Bayan said the only way to prevent overpricing is to dismantle the oil
cartel, 
scrap the oil deregulation law and nationalize the strategic industry. 
“The Estrada government should take serious steps to crush the cartel
instead of colluding with the biggest thieves in the country to "delay"
raising prices because it’s the President’s birthday,” said Casiño. 
 
The group said the oil price hike will trigger increases in the prices of
other prime commodities. “People are worried about the immediate effect on
prices of basic commodities especially foodstuff,” he said. ###