Executive Order 839
One of the most idiotic Executive Order issued by President Gloria Macapagal Arroyo is EO 839 freezing the price of oil to the pre Typhoon Ondoy price level. This single act by an economic expert who happened to teach me Macroeconomics at the Ateneo and is also Noynoy's and Mar's teacher is the most stupid thing she could have done.
It goes against the very basic economic principles of the free market. Oil prices are dictated by global market prices depending on several factors: supply and demand, political events and the assurance of a reliable supply of oil. It is not set by the oil companies operating in the Phlippines. It is set by the suppliers of our oil who prices their oil according to market forces. It is as simple as that. The Philippines has a deregulated oil industry wherein the price of diesel and gas moves with global market forces. This deregulated Industry has a law supporting this.
If we revert back to the regulated type of industry, the government will have to subsidize the price of oil when it goes up and when it goes down, it cannot immediately put down the price of oil since it has to be paid back for the subsidy it gave to the oil companies. The government can ill afford to do this.
EO839 is against the Oil Deregulation Act. Shell Philippines late last week filed a case against the government for violating the law. And rightly so! Business groups such as MBC, PCCI, MAP and FINEX (which I belong to). condemns EO 839. Because of the price freeze, oil companies have refused to import oil since importing more oil will cause them to lose more money. Private enterprise is in business to make money and not to lose money.
We have senators like Enrile, Pimentel and Santiago advocating that the government take over the oil companies and import the oil themselves. That will make us a pariah in the international community. And you wonder why foreign companies are wary in investing in the Philippines? It is this attitude and polices that keep foreign investments away. You do not change the rules in the middle of the game!
If the government truly wants to help the devastated areas recover, they could freeze the price of oil ONLY in affected areas not THE WHOLE FRIGGIN PHILIPPINES! Another way to help those devastated areas is for the government to subsidize the difference in the price of oil in those areas only.
Strong arming the private sector is bad policy. It will result in panic, shortages, blackmarket and it will not help those that will need the help most.
The President knows that EO 839 is against the law. The courts will probably overturn EO 839. But she can always endear herself to the masses and say "See I tried to hold down the prices of oil but the court and the greedy oil companies overturned my EO. Go blame them." Political expediency for herself. This is what this is all about.
EO 839 comes from a President with a MA in Economics.
It goes against the very basic economic principles of the free market. Oil prices are dictated by global market prices depending on several factors: supply and demand, political events and the assurance of a reliable supply of oil. It is not set by the oil companies operating in the Phlippines. It is set by the suppliers of our oil who prices their oil according to market forces. It is as simple as that. The Philippines has a deregulated oil industry wherein the price of diesel and gas moves with global market forces. This deregulated Industry has a law supporting this.
If we revert back to the regulated type of industry, the government will have to subsidize the price of oil when it goes up and when it goes down, it cannot immediately put down the price of oil since it has to be paid back for the subsidy it gave to the oil companies. The government can ill afford to do this.
EO839 is against the Oil Deregulation Act. Shell Philippines late last week filed a case against the government for violating the law. And rightly so! Business groups such as MBC, PCCI, MAP and FINEX (which I belong to). condemns EO 839. Because of the price freeze, oil companies have refused to import oil since importing more oil will cause them to lose more money. Private enterprise is in business to make money and not to lose money.
We have senators like Enrile, Pimentel and Santiago advocating that the government take over the oil companies and import the oil themselves. That will make us a pariah in the international community. And you wonder why foreign companies are wary in investing in the Philippines? It is this attitude and polices that keep foreign investments away. You do not change the rules in the middle of the game!
If the government truly wants to help the devastated areas recover, they could freeze the price of oil ONLY in affected areas not THE WHOLE FRIGGIN PHILIPPINES! Another way to help those devastated areas is for the government to subsidize the difference in the price of oil in those areas only.
Strong arming the private sector is bad policy. It will result in panic, shortages, blackmarket and it will not help those that will need the help most.
The President knows that EO 839 is against the law. The courts will probably overturn EO 839. But she can always endear herself to the masses and say "See I tried to hold down the prices of oil but the court and the greedy oil companies overturned my EO. Go blame them." Political expediency for herself. This is what this is all about.
EO 839 comes from a President with a MA in Economics.