Gasoline up by 626%, Diesel by 746%, since Deregulation
I posted this here 'cause I really get pissed off with how our government does not seem to do anything to address the growing crises in our country. I seriously want to ask GMA if she can still sleep at night knowing how much pain and suffering she is causing the Filipinos while she just corrupts money that's supposed to be for our country. I heard from the news last night that GMA's saying our country's economy is rising due to foreign investors. Ummm, hello? Rising? You have got to be kidding every single Filipino. Do us all a favor and step down. NOW!
In April 1996, gasoline was only P9.50/liter, diesel P7.03. Unleaded gasoline is now priced at P59.47/liter and diesel at P52.48, a whooping 626-percent increase for gasoline, 746 percent for diesel.
BY ALEXANDER MARTIN REMOLLINO
Bulatlat
Vol. VIII, No. 21, June 29-July 5, 2008
Unabated jumps in the prices of petroleum products continue in the Philippines. Prices of gasoline and diesel have gone up 16 times, and by no less than P12 a liter, since last January alone. Gasoline and diesel prices have jumped by P15.01 and P14.00 a liter, respectively, since the start of the year.
As of June 28, gasoline stands at P59.47 ($1.33 at the June 27 exchange rate of $1:P44.79) a liter, while diesel is at P52.48 ($1.17) a liter.
Oil price hikes severely affect the prices of commodities, as petroleum products are used in the production and transportation of goods.
Data from the Center for Women’s Resources (CWR) shows that from April 2007 to April 2008, prices of prime commodities have increased by a range of 7.33-88.89 percent.
These price increases took place even as the peso is supposed to have grown stronger against the dollar from April 2007 to April 2008. Data from the Bangko Sentral ng Pilipinas (BSP or Central Bank of the Philippines) shows that from $1:P47.82 in April 2007, the peso registered at $1:P41.82 in April 2008.
Last May alone, food prices soared by 14 percent, according to the Bagong Alyansang Makabayan (Bayan or New Patriotic Alliance), with commercial rice now costing no less than P32 a kilo.
The inflation rate nearly doubled from December 2007 to March this year. From 3.9 percent in December 2007, the inflation rate shot up in the succeeding three months to 6.4 percent. Last May, the inflation rate reached a nine-year high.
Oil firms have claimed that the frequent spikes in the prices of their products are offshoots of their supposed need to recover losses from the jumps in world oil prices. They have recently implemented weekly price hikes of P1.50.
But frequent oil price hikes are nothing new in the Philippines. The Philippines has been suffering from increasingly frequent oil price hikes since the deregulation of the downstream oil industry.
The downstream oil industry was deregulated in April 1996, upon the passage of Republic Act No. 8180. Two years later, RA 8180 would be replaced with RA 8479, which eliminated the first law’s provisions on tariff differential, stocking of inventories, and predatory pricing.
President Gloria Macapagal-Arroyo, who was a senator in 1995-1998, authored RA 8479 among other laws paving the way for the Philippines’ entry into the World Trade Organization (WTO) framework.
“The problem with deregulation is that it assumes that there is free competition, meaning that supply and demand are the decisive factors,” said Arnold Padilla of Bayan’s public information department. “But the world oil industry, of which the Philippine oil industry is part, is monopolized and because of that, it is easy to dictate prices and bring these up artificially.”
“Whether or not there are oil price hikes, world oil prices have already been high to begin with, because these are dictated (by the monopolies),” Padilla, who wrote several papers on the oil industry for the socio-economic think tank IBON Foundation before joining Bayan, also said. “A deregulated environment allows the monopolies to further bring up prices of petroleum products through manipulation and transfer pricing.”
Data from the Department of Energy (DoE) show that under deregulation, the Philippines has been suffering from more frequent oil price hikes than during the pre-deregulation period. The increased frequency of oil price hikes under the deregulated environment contributed greatly to bringing prices of petroleum products to their present exorbitant levels.
Historical Pump Prices of Gasoline and Diesel
(In pesos/liter)
Period
Gasoline
Diesel
1975-1995 average
5.99
3.98
April 1996
9.50
7.03
January 2001
16.56
13.82
2003 average
18.52
15.71
2004 average
23.55
20.10
2005 average
31.91
28.74
2006 average
39.27
34.48
October 2007 average
42.45
36.95
June 28, 2008
59.47
52.48
Source: Department of Energy
Using the June 28 figures, we can see that the prices of gasoline and diesel have gone up by 626 and 746 percent, respectively, since the implementation of the Downstream Oil Industry Deregulation Act.
Both the government and oil firms have claimed that local oil price hikes are the results of uncontrollable developments in the world market. But drops in world crude prices have not always translated into slides in local oil prices, and there have been instances when oil companies in the Philippines jacked up the prices of their products even in the absence of spikes in the world market. The period 1998-August 2001 can be cited for reference.
World Crude vs. Local Oil Prices, 1998-August 2001
Period
World Crude Oil
$/petroleum barrel
Forex
P/$1
Local Gasoline
P/liter
Local Diesel
P/liter
1998 average
12.2
40.90
12.20
8.30
1999 average
17.2
39.10
12.90
8.90
2000 average
26.1
44.30
16.60
11.90
January 2001
22.9
50.90
18.10
13.80
February 2001
24.8
48.20
18.10
13.80
March 2001
23.5
48.50
18.10
13.80
April 2001
24.2
50.30
18.10
13.80
May 2001
25.6
50.50
18.60
14.30
June 2001
25.7
51.60
18.60
14.30
July 2001
23.4
53.30
18.90
14.60
August 2001
24.5
51.90
18.70
14.40
Source: Business World, Sept. 5, 2001
Recent data from IBON Foundation shows that as much as P31 a liter of the pump prices of petroleum products in the Philippines go to oil companies’ windfall profits.
IBON based its figures on its estimates of the actual cost of oil at $31-32 per barrel. By subtracting this from the May 2008 average Dubai spot price of $117/barrel, IBON estimates that the oil firms may have already earned windfall profits of $86-87for every barrel of crude oil.
Applying this to local pump prices, at $159/barrel of crude oil in the world market and using a $1:P43 exchange rate, IBON came up with figures showing that P26-31/liter and P23-27/liter of the prices of gasoline and diesel, respectively, go to oil companies’ windfall profits.
“The market should be regulated,” Padilla said. “This means automatic price adjustments should not be allowed.”
The effects of automatic and arbitrary price adjustments under the Philippines’ deregulated regime have been aggravated by speculation in the futures market, which has intensified since 2001 - the year the U.S. launched its global war on “terror.”
“That aggravated the situation,” Padilla said. “If before prices were already unaffected by the dynamics of supply and demand, but prone to manipulation because of deregulation, speculation pushed oil prices further up.”
“This issue of speculation actually boosts our argument against deregulation,” Padilla also said. “This boosts our argument for regulation.” Bulatlat
In April 1996, gasoline was only P9.50/liter, diesel P7.03. Unleaded gasoline is now priced at P59.47/liter and diesel at P52.48, a whooping 626-percent increase for gasoline, 746 percent for diesel.
BY ALEXANDER MARTIN REMOLLINO
Bulatlat
Vol. VIII, No. 21, June 29-July 5, 2008
Unabated jumps in the prices of petroleum products continue in the Philippines. Prices of gasoline and diesel have gone up 16 times, and by no less than P12 a liter, since last January alone. Gasoline and diesel prices have jumped by P15.01 and P14.00 a liter, respectively, since the start of the year.
As of June 28, gasoline stands at P59.47 ($1.33 at the June 27 exchange rate of $1:P44.79) a liter, while diesel is at P52.48 ($1.17) a liter.
Oil price hikes severely affect the prices of commodities, as petroleum products are used in the production and transportation of goods.
Data from the Center for Women’s Resources (CWR) shows that from April 2007 to April 2008, prices of prime commodities have increased by a range of 7.33-88.89 percent.
These price increases took place even as the peso is supposed to have grown stronger against the dollar from April 2007 to April 2008. Data from the Bangko Sentral ng Pilipinas (BSP or Central Bank of the Philippines) shows that from $1:P47.82 in April 2007, the peso registered at $1:P41.82 in April 2008.
Last May alone, food prices soared by 14 percent, according to the Bagong Alyansang Makabayan (Bayan or New Patriotic Alliance), with commercial rice now costing no less than P32 a kilo.
The inflation rate nearly doubled from December 2007 to March this year. From 3.9 percent in December 2007, the inflation rate shot up in the succeeding three months to 6.4 percent. Last May, the inflation rate reached a nine-year high.
Oil firms have claimed that the frequent spikes in the prices of their products are offshoots of their supposed need to recover losses from the jumps in world oil prices. They have recently implemented weekly price hikes of P1.50.
But frequent oil price hikes are nothing new in the Philippines. The Philippines has been suffering from increasingly frequent oil price hikes since the deregulation of the downstream oil industry.
The downstream oil industry was deregulated in April 1996, upon the passage of Republic Act No. 8180. Two years later, RA 8180 would be replaced with RA 8479, which eliminated the first law’s provisions on tariff differential, stocking of inventories, and predatory pricing.
President Gloria Macapagal-Arroyo, who was a senator in 1995-1998, authored RA 8479 among other laws paving the way for the Philippines’ entry into the World Trade Organization (WTO) framework.
“The problem with deregulation is that it assumes that there is free competition, meaning that supply and demand are the decisive factors,” said Arnold Padilla of Bayan’s public information department. “But the world oil industry, of which the Philippine oil industry is part, is monopolized and because of that, it is easy to dictate prices and bring these up artificially.”
“Whether or not there are oil price hikes, world oil prices have already been high to begin with, because these are dictated (by the monopolies),” Padilla, who wrote several papers on the oil industry for the socio-economic think tank IBON Foundation before joining Bayan, also said. “A deregulated environment allows the monopolies to further bring up prices of petroleum products through manipulation and transfer pricing.”
Data from the Department of Energy (DoE) show that under deregulation, the Philippines has been suffering from more frequent oil price hikes than during the pre-deregulation period. The increased frequency of oil price hikes under the deregulated environment contributed greatly to bringing prices of petroleum products to their present exorbitant levels.
Historical Pump Prices of Gasoline and Diesel
(In pesos/liter)
Period
Gasoline
Diesel
1975-1995 average
5.99
3.98
April 1996
9.50
7.03
January 2001
16.56
13.82
2003 average
18.52
15.71
2004 average
23.55
20.10
2005 average
31.91
28.74
2006 average
39.27
34.48
October 2007 average
42.45
36.95
June 28, 2008
59.47
52.48
Source: Department of Energy
Using the June 28 figures, we can see that the prices of gasoline and diesel have gone up by 626 and 746 percent, respectively, since the implementation of the Downstream Oil Industry Deregulation Act.
Both the government and oil firms have claimed that local oil price hikes are the results of uncontrollable developments in the world market. But drops in world crude prices have not always translated into slides in local oil prices, and there have been instances when oil companies in the Philippines jacked up the prices of their products even in the absence of spikes in the world market. The period 1998-August 2001 can be cited for reference.
World Crude vs. Local Oil Prices, 1998-August 2001
Period
World Crude Oil
$/petroleum barrel
Forex
P/$1
Local Gasoline
P/liter
Local Diesel
P/liter
1998 average
12.2
40.90
12.20
8.30
1999 average
17.2
39.10
12.90
8.90
2000 average
26.1
44.30
16.60
11.90
January 2001
22.9
50.90
18.10
13.80
February 2001
24.8
48.20
18.10
13.80
March 2001
23.5
48.50
18.10
13.80
April 2001
24.2
50.30
18.10
13.80
May 2001
25.6
50.50
18.60
14.30
June 2001
25.7
51.60
18.60
14.30
July 2001
23.4
53.30
18.90
14.60
August 2001
24.5
51.90
18.70
14.40
Source: Business World, Sept. 5, 2001
Recent data from IBON Foundation shows that as much as P31 a liter of the pump prices of petroleum products in the Philippines go to oil companies’ windfall profits.
IBON based its figures on its estimates of the actual cost of oil at $31-32 per barrel. By subtracting this from the May 2008 average Dubai spot price of $117/barrel, IBON estimates that the oil firms may have already earned windfall profits of $86-87for every barrel of crude oil.
Applying this to local pump prices, at $159/barrel of crude oil in the world market and using a $1:P43 exchange rate, IBON came up with figures showing that P26-31/liter and P23-27/liter of the prices of gasoline and diesel, respectively, go to oil companies’ windfall profits.
“The market should be regulated,” Padilla said. “This means automatic price adjustments should not be allowed.”
The effects of automatic and arbitrary price adjustments under the Philippines’ deregulated regime have been aggravated by speculation in the futures market, which has intensified since 2001 - the year the U.S. launched its global war on “terror.”
“That aggravated the situation,” Padilla said. “If before prices were already unaffected by the dynamics of supply and demand, but prone to manipulation because of deregulation, speculation pushed oil prices further up.”
“This issue of speculation actually boosts our argument against deregulation,” Padilla also said. “This boosts our argument for regulation.” Bulatlat