Archive for the ‘oil’ Category

Palace acts on cooking gas : Reyes given 2 weeks to solve LPG problem Supplies have started arriving, says DoE official

January 29, 2009

By DAVID CAGAHASTIAN

Malacañang has given Department of Energy (DoE) Secretary Angelo Reyes a two-week deadline to solve the shortage in the supply of liquefied petroleum gas (LPG) nationwide.

Executive Secretary Eduardo Ermita said Reyes should solve the shortage in the supply of LPG within two weeks or he would be admonished for failure to solve the energy problem.

Ermita said Department of Energy (DoE) Undersecretary Roy Kyamco has denied reports that the LPG shortage would last until March, citing supplies are starting to arrive.

“According to Undersecretary Roy Kyamco, starting a week ago, the delivery of LPG started to come in and this delivery will continue until March. He said it’s not true that there will be a shortage up to March,” Ermita said.

The Executive Secretary said the arrival of the deliveries would ensure that the LPG shortage would be solved within two weeks.

“He asked me to give them two weeks, then if the problem has not abated, then we will call the Department of Energy to task,” Ermita said.

Kyamco explained that the LPG shortage was caused by delays in the delivery to replenish the supplies that have dwindled due to the high demand for LPG during the Christmas season.

Ermita said he could only admonish Reyes for the LPG shortage if the two-week deadline lapses without solving the LPG shortage, and that the decision on whether to dismiss him for the prolonged and unexplained LPG shortage lies with President Arroyo.

“I will have to call him to task if his promises are not realized, then he would be able to give us some explanations,” Ermita said.

VP De Castro warns hoarders of cooking gas

Attributing the shortage of cooking gas or liquefied petroleum gas (LPG) to illegal acts of hoarding and profiteering, Vice President Noli “Kabayan” De Castro warned that these unscrupulous refillers and dealers will be dealt with under full force of the law.

De Castro made the warning amid reports of shortage and unusually high prices of LPG despite the statement of the Department of Energy that there is enough LPG supply.

“I believe that there is an artificial LPG shortage created by unscrupulous hoarders and profiteers who want to rake in profits to the disadvantage of our consumers. I warn those who are manipulating the market…we will definitely go after you and have you liable under the law,” De Castro said.

De Castro said that the Departments of Energy and Justice have already created a task force in order to investigate and prosecute cases against traders who are storing large volumes of the cooking gas.

He called on the DOEDOJ task force to step up its campaign against LPG hoarders after prices of cooking gas reportedly rose to as high as R80 per kilo as against the R45-50-price mandated by the Department of Trade and Industry.

“I also exhort the people and media to report to us those they know are hoarding and creating this artificial LPG shortage. I just want to assure the public that the government is doing everything to normalize the situation and protect the interest of the buying public. The people should not resort to panic buying as this will just worsen the situation,” De Castro said.(MB)

==============

My Take:

Clearly, there is gas hoarding.  And happening under the very nose of the DOE.  Judging by how Reyes deals with the power problem in the country today, and his agency’s seemingly favorable eye to the coal plant proponents nationwide, his agency has knowledge about the behind the scenes of the present gas crisis in the country today.

Advertisements

San Miguel Corp. takes over control of Petron

January 10, 2009

By Chino S. Leyco, Reporter

Southeast Asia’s largest food and beverage conglomerate took control of the Philippines’ largest oil refinery, when it announced Friday that Ramon Ang would be its new chairman and chief executive officer.

Ang is also president and chief operating officer of San Miguel Corp., and he replaces Nicasio Alcantara at Petron, also one of the top-three petroleum firms in the country.

Along with Ang, San Miguel Chairman Eduardo Cojuangco Jr. was voted as one of Petron’s directors.

Luis Maglaya, Petron corporate secretary, said Ang, Conjuanco and other San Miguel executives were elected during the petroleum company’s special board meeting on Thursday.

Also during the election, it was decided that Alcantara would stay on as director but “vice” of Ang, according to the disclosure.

Other San Miguel people who won seats in Petron were Estelito Mendoza, director; Emmanuel Eraña, chief finance officer, and Lubin Nepomu­ceno, general manager.

The positions of Eraña and Nepomuceno are new in Petron.(ManilaTimes)

Cha-Cha Proposal to Legalize Foreign Plunder of Philippines’ Resources

December 4, 2008

The proposed amendment in the Constitution seeking to allow the foreign corporations to own land will legitimize the all-out and ongoing exploitation and plunder by foreign corporations of the country’s natural resources.

BY IBON FOUNDATION
Posted by Bulatlat

The proposed amendment in the Constitution seeking to allow the foreign corporations to own land will legitimize the all-out and ongoing exploitation and plunder by foreign corporations of the country’s natural resources.

Among the various amendments that Charter change (Cha-cha) proponents are pushing for is the removal of so-called restrictive provisions in the constitution, including the proposal to dismantle the 40-percent foreign ownership restriction of public lands.

This proposal aims to amend Art. XII, Secs. 2 and 3 which say that the state should fully control public land and natural resources and may enter into production sharing agreements as long as Filipinos own 60 percent of the capital.

As it is, this constitutional provision has not effectively restricted full foreign control over the Philippines’ strategic natural resources like minerals and petroleum. For example, mining agreements as of January 2008 have reached a total of 294, covering approximately 600,000 hectares of highly mineralized lands around the country.

Another case is the Malampaya oil field, which is under a service contract with oil giants Shell and Chevron. Instead of Filipinos benefiting from its crude reserves, Malampaya has been exporting billions of dollars worth of crude oil since 2001, bringing immense profits for these giant oil firms.

This provision in the Constitution is important since it protects the state from entering into arrangements that would allow the abuse of resources by foreign corporations. Amending this provision and dismantling the restriction of foreign ownership of lands will only worsen the foreign plunder of our national resources and further undermine national interest.

Land, as well as our other natural resources, plays a strategic role in national economic development, environment, and way of life – and these resources should be effectively controlled by the state. Ultimately, the country’s economic sovereignty and potential for industrialization are at stake with Cha-cha. Posted byBulatlat.com

(Editorial Cartoon)

November 13, 2008

new-icebreaker

Transport Leader Says Gov’t Should Go After ‘Legal Loot’ of Oil Companies

October 12, 2008

The militant Pagkakaisa ng mga Samahan ng mga Tsuper at Operators Nationwide (Piston or Unity of Drivers and Operators’ Associations Nationwide) said that the government should go after what it described as “legal looters” of motorists’ money – the giant oil companies.

BY NOEL SALES BARCELONA
Bulatlat

The militant Pagkakaisa ng mga Samahan ng mga Tsuper at Operators Nationwide (Piston or Unity of Drivers and Operators’ Associations Nationwide) said that the government should go after what it described as “legal looters” of motorists’ money – the giant oil companies.

The call comes after Bureau of Customs (BoC) Commissioner Napoleon L. Morales boasted about the BoC’s achievements in running after oil smugglers after the Court of Tax Appeals (CTA) junked the temporary restraining order (TRO) filed by BSJ Fishing and Trading, Inc. to prevent the implementation of the Commissioner’s visitorial powers in its facilities at the Navotas Fish Port Complex.

Due to the lifting of the TRO, the BOC has been able to seize P2 million (US$42,018.57) worth of suspected smuggled oil, said Morales in a press briefing at the weekly Kapihan sa Sulô last Saturday, Oct. 11.

Steve Ranjo, president of Piston, however said the P2 million worth of suspected smuggled oil seized by the BoC is just a fraction of the amount being looted, legally through the continuous implementation of the Downstream Oil Industry Deregulation Act of 1998 and the value-added tax (VAT) on oil products.

“It’s common knowledge among transport organizations that there is some oil being smuggled and sold domestically. Morales himself said, in a meeting with Energy Secretary Angelo Reyes, that billions of pesos’ worth of oil were illegally transported to the Philippines. But it’s only a pittance compared to the billions of pesos being extracted from the motorists’ pockets because of the uncontrolled increases in petroleum prices” Ranjo said in an interview.

He added that it is the BoC’s job to go after the smugglers and seize contrabands, but said the issue of high oil prices goes beyond smuggling.

“The government should probe deeply into the matter of speculation on oil prices, over-taxation on oil such as VAT, and the inutility of government agencies in controlling soaring oil prices, despite their knowledge of how speculation increases pump prices,” Ranjo said. (Bulatlat.com)

Oil Deregulation Minus the Jargon

October 12, 2008

Deregulation is quite simple but the powers-that-be tend to provide complicated explanations in claiming that it should be given a chance to work despite what is happening in the world market. Indeed, a clear understanding of oil deregulation leads one to oppose it, especially at the onset of unabated oil price hikes and inconsequential rollbacks.

BY DANILO ARAÑA ARAO
Bulatlat

Stripped of all the technical jargon, the deregulation that is characteristic of the downstream oil industry is very easy to understand.

In order for the economy to progress, there is a need to remove all barriers to free competition. The government should not directly compete with local and foreign investors, hence the need to sell to the private sector (i.e., “privatize”) government-owned and controlled corporations (GOCCs) like Petron which competes with private companies like Shell and Chevron.

Unlike in the past, the deregulated regime allows any industrialist to invest in the downstream oil industry. Data from the Department of Energy (DOE) show that there are 601 new industry players competing with the so-called Big Three – Petron, Shell and Chevron.

In removing the regulations that used to prevent free competition, government officials and neoliberal thinkers expect the empowerment of consumers. They argue that under a deregulated regime, consumers are “empowered” in the sense that they now have more choices. If in the past there were only three companies, there are now hundreds to choose from.

For those who believe in the principle of globalization (of which deregulation is one of the tenets, the other two being liberalization and privatization), the measurement of “consumer power” is defined along the lines of increased choices. (i.e., “If the consumer has the choice, the consumer has the power.”)

More companies mean “better and freer” competition which would then result in lower prices and better services for the consumers. The tendency of the capitalist, according to those who argue for deregulation, is to attract as many customers as possible in whatever ways necessary, like creative advertisements, substantial discounts and, of course, lower prices.

The deregulation of the downstream oil industry started in April 1996. The prices of gasoline and diesel then were P9.50 ($0.185 at the 1996 exchange rate of $1=P51.31) and P7.03 ($0.13) per liter, respectively. As a result of oil price hikes in the years that followed, gasoline and diesel reached more than P60 ($1.33 at the July 2008 exchange rate of $1=P44.956) and P50 ($1.11) per liter.

There have been rollbacks since August but these are said to be not enough based on the prices of Dubai crude and the peso-dollar exchange rate. The table below illustrates this point.

Average Retail Prices of Selected Petroleum Products,
Dubai crude prices and Peso-Dollar Exchange Rate
September 2007 and 2008 (in peso per liter except LPG)
Sept. 25, 2007 Sept. 19, 2008 Increase a/
Unleaded gas 40.95 50.96 24.44%
Diesel 35.45 49.94 40.87%
LPG b/ 480-533 598-659 23.64%
Dubai crude
(in US$ per barrel) c/ 75.68 87.01 14.97%
Peso-dollar exchange rate (in peso per US$) d/ 46.1315 46.6922 1.21%
Sources of basic data: Department of Energy; Bangko Sentral ng Pilipinas; and New Zealand Ministry of Economic Development
a/ Percentage increase for LPG based on highest price for the period in review
b/ Dealers’ pick-up price (11 kg)
c/ 2007 price as of September 28
d/ Monthly average for September 2007 and 2008

It is easy to argue that we currently live in an “abnormal” situation due to the continued increase in the price of crude in the world market. The weekly average Dubai crude, for example, reached its highest last July 4 at $137.27 per barrel. As of September 26, it is pegged at $96.68 per barrel.

However, one notices an even more abnormal increase in the pump price of diesel, widely consumed by the transport sector, relative to the increase in Dubai crude.

Twelve years have passed since the implementation of oil deregulation and the only positive effect it had was on the profits of oil companies and increased tax collection of the government, especially with the increase of the value-added tax from 10 percent to 12 percent and its expansion in 2005 to include petroleum products. For 2008, the Department of Finance expects a collection of P73.4 billion ( $1,543,443,519 at the October 10, 2008 exchange rate of $1=P47.556) from the VAT on petroleum products.

Why did the expected lowering of prices of petroleum products not happen in a deregulated regime? Unlike others, petroleum products are said to be “demand inelastic.” This means that the demand for such products is not affected by fluctuations in prices because these are needed by the public.

The transport sector, for example, absolutely needs petroleum products to continue with its operations and it will always procure such products regardless of the price.

In my independent monitoring of the prices of petroleum products, what Petron, Shell and Chevron normally do is to take the lead in increasing prices and the industry players would follow afterwards. The different oil companies normally maintain only a price differential of P0.50 per liter.

Deregulation is quite simple but the powers-that-be tend to provide complicated explanations in claiming that it should be given a chance to work despite what is happening in the world market.

Indeed, a clear understanding of oil deregulation leads one to oppose it, especially at the onset of unabated oil price hikes and inconsequential rollbacks. (Bulatlat.com)

This is a shortened version of the paper presented by the author at the 30th anniversary lecture of IBON Foundation last October 7. His slide presentation (in PDF) may be retrieved from http://www.dannyarao.com/files/arao-downstream-oil-deregulation.pdf.

Galoc starts producing oil

October 10, 2008

By Abigail L. Ho, TJ Burgonio
Philippine Daily Inquirer
First Posted 02:29:00 10/10/2008

MANILA, Philippines—After numerous delays, the Galoc oil field off northwest Palawan has finally produced oil, boosting the country’s hope to become 60-percent energy self-sufficient by 2010.

First discovered in 1981 and appraised in 1988, the Galoc field was left undeveloped due to the risks associated with its development and the then low price of oil.

Delays in the delivery of the first oil mean that its operators have missed this year’s oil price rally. Global crude oil prices are now around $89 a barrel, well off highs near $150 a barrel in mid-July.

In a joint statement, Energy Secretary Angelo Reyes and Jeff Davison, chief operating officer of service contract operator Galoc Production Co. (GPC), said the first well opened at 10:45 a.m., with first oil on board the vessel by 11:20 a.m.

GPC had repeatedly missed its first oil targets this year due mainly to bad weather.

Based on the consortium’s timetable, flow testing would be conducted over the coming weeks to stabilize production. Upon stabilization, production is expected to reach 20,000 barrels a day from the two wells.

6 percent of oil demand

For the remainder of 2008, production should average around 17,000 barrels a day.

“We are expecting to get 20,000 barrels a day in the first 90 days of commercial production. That will provide for 6 percent of the daily oil demand of the country,” Reyes said.

Independent appraiser Gaffney, Cline and Associates had estimated the production rate at the Galoc field to reach 23,000 barrels a day, on average, for the first year of production.

The Galoc field, 65 km northwest of Palawan, holds oil reserves estimated at 10 million barrels.

The new crude will raise the Philippines’ domestic oil output by some 70 percent to 42,500 bpd, a welcome addition to the country, which imports nearly all of its requirements.

But Galoc’s crude, also called Palawan Light, could find it hard attracting customers as it has a higher sulphur content than most Asia-Pacific grades, at 1.64 percent.

It is also coming on stream at a time of weakening oil demand in Asia, even as Vietnam has started selling first cargoes of its new light sweet Song Doc crude.

Reduction in imported oil

In June, Reyes said Galoc’s output would be aimed at local refineries.

Malacañang officials hailed the extraction of oil from the Galoc field saying this would reduce the country’s dependence on imported oil and save the country millions of dollars.

“The President is optimistic that this new development will positively impact on the administration’s efforts to reduce the country’s annual oil importation of $6 billion, and in turn will also contain the increasing cost of food and other commodities,” Executive Secretary Eduardo Ermita said, reading from a statement.

This, he added, would translate into $1.4 billion foreign exchange savings for the Galoc oil well’s lifetime of three to five years.

The country imported some $8.8 billion worth of oil last year, up from $8 billion the previous year. The total imports reached 120.1 million barrels in 2007.

GPC owns 58.29 percent of the Galoc contract area covered by Service Contract 14C, while Australian firms Nido Petroleum Ltd. and Otto Energy Ltd. hold 22.28 percent and 18.28 percent, respectively.

Other shareholders include local companies The Philodrill Corp. (7.03 percent), Oriental Petroleum and Minerals (4.96 percent), Linapacan Oil, Gas and Power (2.61 percent), Forum Energy (2.27 percent), Alcorn Gold Resources (1.53 percent), and PetroEnergy Resources (1.03 percent).

Vitol and European trader Trafigura will be the two main marketers of Palawan Light.

The Philippines also wants to drill oil from its Malampaya gas field off the Palawan coast and expects to start producing oil from its largest hydrocarbon discovery in less than two years. With a report from Reuters

Oil Speculation and Under-Recoveries

September 28, 2008

Whatever happens with oil speculation, the big oil companies are always at the winning end. As oil prices go up, so do the profits of oil companies. How then can they claim for under-recoveries?

BY BENJIE OLIVEROS
ANALYSIS
Bulatlat

After going down steadily after reaching a peak of $147 per barrel in July, oil prices are threatening to rise up again. World oil prices have already gone down to around $90 per barrel when news of the bankruptcy of Lehman Brothers, the purchase of Merrill Lynch, and the bail out of AIG broke out. This caused the volatility of oil prices once again. The announcement of Bush’s $700 billion bailout plan triggered a reduction then an increase in oil prices.

Oil contracts for October delivery, in electronic trading on the New York Mercantile Exchange in Singapore, surged to $130 a barrel before settling down to $120.92 on Monday September 22. Contracts for November delivery of oil, however, went down to $107.41 a barrel before settling at $109.37 during trading last September 23. Were there expectations of a storm, an attack on oil wells in Nigeria, or a war on Iran that would disrupt supplies? Is a surge in demand in China or the US being expected? No.

An analyst said that investors are looking for a “safe haven” in oil after the series of bankruptcies indicating the extent of the financial crisis. It was also said that uncertainties on the effects of the $700 billion bailout plan on the US economy – worsening the US government deficit, fall in the value of the dollar, among others – also triggered investments in oil futures. If this is not a manifestation of the effects of speculative investments in the oil futures market then what is?

As a “by the way”, analysts also cited the decision of the Organization of Petroleum Exporting Countries (OPEC) to cut production and the effects of Hurricane Ike and Gustav during early September for “having helped” spark increases in oil prices.

Oil traders doubling as analysts have consistently denied that speculation is pushing oil prices up, and for obvious reasons. Often cited for the oil price spikes were geopolitical tensions such as in Iran and Nigeria, anticipation of increases in demand, and the “Peak Oil” theory. Promoters of the Peak Oil theory, which asserts that world oil production and reserves are going down and in danger of being depleted in the near future thereby triggering volatility in oil prices had their heyday till July when oil prices reached its peak at $147 per barrel. Sounding like doomsayers, they predicted that oil prices would reach $200 per barrel while laughing their way to the bank; a closer look at the proponents of this theory such as a T. Boone Pickens, a former oil producer and current chair of BP Capital Management, which invests and trades in oil futures, reveals that they profit from oil price spikes. Even when oil prices started going down, they still insisted that it would go up to $200 per barrel. When oil prices went down to around $90 per barrel, they became conspicuously silent.

A June 2006 US Senate report has concluded that around 25 to 30 percent in the $60 per barrel price of oil then was due to speculation. More recently, F. William Engdahl, an Associate for the Center for Research on Globalization and author of A Century of War: Anglo-American Oil Politics and the New World Order, concluded in an article published at the website of Global Research May 2008 that an astonishing 60 percent of the price of oil is due to speculation.

Undoubtedly, investors in oil futures would have wanted and profited from a continuous increase in oil prices. That is why they kept on pushing oil prices up. But real demand, which fell because oil became too expensive, caught up with them. By then, the big investment banks that were able to sell on time have gained enormous profits through the price differences while those caught holding the bag (highly priced oil futures contracts) when prices fell may have experienced losses.

What about the oil companies?

Whatever happens with oil speculation, the big oil companies are always at the winning end. As oil prices go up, so do the profits of oil companies. Whenever oil prices go way beyond the cost of production plus the average rate of profit because of speculation, oil companies are able to gobble up super profits. In August 2005, one analyst estimated that the $60 per barrel price of oil should only be $25 per barrel without speculation. That means oil companies earned an extra $35 per barrel in profits. Using the same computation, Engdahl estimated that with the prevailing $115 per barrel price of oil in May 2008, $50 to $60 was due to speculation. Thus, by selling at $115 per barrel, oil companies earned additional profits of from 77 to 100 percent.

It is then not surprising that six oil companies – Exxon Mobil, Royal Dutch Shell, BP, Chevron, Total, ConocoPhillips- are among the top 10 corporations of Fortune Magazine’s Global 500. But that is only in terms of revenues. In terms of profits, oil companies occupy the top 2, the 4th, 7th and 8th positions. Other profitable companies included General Electric, HSBC Holdings, the Russian energy firm Gazprom, JP Morgan, and Royal Bank of Scotland. With the fall of investment banks, oil companies would surely be the ones who are left standing.

The big three local oil companies are mere subsidiaries of the oil giants. Caltex is the local subsidiary of Chevron Texaco; Royal Dutch Shell is the mother company of Shell Philippines; Aramco owns 40 percent of Petron. Local subsidiaries source or import oil from their mother companies, and their transactions could be treated as intra-corporate transfers. They do not have to source their supply of oil from the spot and futures markets. It is then a wonder why they say that they sacrificed their profits – and thus have to claim for under-recoveries- with the spike in world crude prices during the first half of the year when they increased pump prices every week, and their mother companies need not base their pass- on price to their local subsidiaries on the speculation-boosted price in the world market.

If oil companies were not so greedy, they should have based their pass-on price on the actual cost of production, freight and marketing costs plus the average rate of profit. Their claim that they could not roll back local pump prices immediately at the price level reflective of current world crude prices is the height of callousness. It is also a wonder why small players like SeaOil could offer lower prices and reduce local pump prices faster when they have to import their supply of petroleum products.

However, the small players could not survive without establishing partnerships with oil industry giants. They serve as marketing arm of the big oil giants. For example SeaOil has a partnership with Paramins for its lubricants, and Paramins is owned by Exxon Mobil, which in turn, entered into a joint venture with Shell Additives. On the other hand, Chevron Additives bought a product line of Exxon Chemicals.

The oil giants control the whole industry from exploration, drilling, production, to refinement, marketing, and distribution of all petroleum products. Everything about oil starts and ends with them. How can they lose?

The greed of oil companies has been fueled further with the Downstream Oil Industry Deregulation Act of 1996. With the deregulation of the oil industry, they are able to increase prices at will when world crude prices go up and delay the reduction of pump prices when world prices go down. And the government could not do anything about it. But of course, the Arroyo government could not be expected to take the side of the Filipino people and force oil companies to roll back pump prices. It likewise profits with the spike in oil prices with the Value-Added Tax on petroleum products: the higher the pump price of oil, the bigger is its collections. Only the Filipino people could force its hand to do so. (Bulatlat)

A Day in the Life of a Jeepney Driver

September 27, 2008

Jeepney drivers work long days and endure a lot of difficulties in their struggle to eke out a daily living. At the end of the day, however, their earnings are far from enough to afford basic necessities.

BY ALEXANDER MARTIN REMOLLINO
Bulatlat

Sa maghapon
Ang buhay ay pamamasada
Tinitiis
Usok at init ng makina
At pag kulang pa ang kita
Kailangan pang umarangkada

Ganyan ang buhay-jeepney driver
Sa buong araw na kayod
Mga tuhod ay nanlalambot
‘Yan ang buhay-jeepney driver
Sa buong araw na pasada
“Jingle” lang ang pahinga
‘Yan ang buhay-jeepney driver
Pag may konti nang kita
Pwede nang pumarada

– Noel Cabangon, “Jeepney Driver”

These lines definitely apply to the case of Mang Vito Pulmon, who plies the route from Project 3 in Quezon City to Quirino Avenue in Manila and back.

A typical day for Mang Vito begins at around 6 a.m., when he does his first round trip along his route. He has to complete five such round trips everyday to be able to take home some money for his family.

This routine of his has not changed for the last few years, despite the recent rollbacks in prices of petroleum products.

Diesel prices last month came close to P55 ($1.23 at the August 2008 average exchange rate of $1:P44.88) as a result of a series of oil price hikes starting last January.

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. World crude prices increased at a seemingly uncontrollable pace with projections that it would hit $200 per barrel. But these peaked at $147 per barrel before going down steadily. Mainstream analysts claimed that diminishing oil reserves, weather disturbances, and geopolitical factors such as the impending war between the US and Iran caused prices to rise; although some attribute it to a speculation frenzy in the oil futures market, especially after the sub-prime mortgage crisis in the US when hedge fund managers lost millions of dollars.

In the Philippines, oil companies have implemented a total of seven rollbacks since last August. These rollbacks have brought down prices by P8.50 a liter for gasoline and P6.50 for diesel.

World crude prices in the oil futures market first hit the $100/barrel mark in January this year, while its spot price was around $92.93. The local pump price of unleaded gasoline in January was at P44.45 per liter and diesel at P38.45. World crude prices in the futures market hit $103/barrel in February and $110/barrel in March, with spot prices reaching $93.51 in February and $99.32 in March. Local pump prices in February and March ranged from P43.96 to P46.46 for unleaded gasoline and from P36.94 to P39.44 for diesel.

Brent crude oil for October delivery last traded at $99.43 and light, sweet crude at New York Mercantile Exchange at $101.74. Spot prices range between $93.06, for oil from the Urals, to $104.04 for Louisiana sweet oil. Local pump prices now range from P51.25-52.85/liter for unleaded gasoline, and P48.95-51.09/liter for diesel.

The current range of pump prices for unleaded gasoline and diesel is visibly still above the monthly averages for the period January-March 2008, bolstering the claims of drivers and militant organizations that the current oil price rollbacks are not enough.

“Hindi nararamdaman ng drayber y’ong rollback. Dapat, mas malaki ang ibaba ng presyo ng langis. Ang mahal-mahal ng langis, sa gasolinahan lang napupunta y’ong kita namin” (Drivers cannot feel the supposed benefits from the rollbacks. Oil prices should be reduced more. Petroleum products are so expensive that our earnings mostly go to the gasoline stations), Mang Vito said.

Sweating it out

I accompanied him one day last week for a few round trips along his route and got first-hand insight into what Mang Vito and other jeepney drivers have to go through everyday to eke out a living.

A trip from Project 3 to Quirino Avenue takes between 2 ½ to three hours on days when traffic is moderate. When traffic is heavy, Mang Vito said, it could take up to four hours.

It was very humid when we went on that trip, like it was going to rain anytime. But it did not rain. The weather was like that throughout the day.

On days like that it is an ordeal to be stuck in considerably heavy traffic, like what happened to us several times on E. Rodriguez Avenue in Quezon City, as well as on Espana Street in Manila which seem to be perennial traffic hotspots. As Mang Vito himself describes it, “masakit y’ong init” (the heat hurts).

The prolonged exposure to the sun’s heat comes on top of having to endure the high temperatures from the jeepney’s engine.

On rainy days, Mang Vito says, at least you don’t have to endure the excruciating heat. But a different problem arises. “Pag bumaha, hindi ka na makabiyahe” (When it floods, you can go on with your trip anymore), he says. And there are many flood-prone areas along his route.

There are many other things that a jeepney driver has to endure. Often he has to endure the grumbling of his stomach because he has to postpone his meals and his snacks until he completes a round trip along his route (it was over two hours past normal lunchtime, for instance, when we were able to have our lunch). With that also comes the fact that he often has to postpone relieving himself, sometimes by one hour or more: for some drivers, the alternative would be to stop somewhere along the route and relieve themselves on their vehicles’ wheels. Apart from that, drivers who ply Metro Manila routes have to deal daily with the dust and smoke that famously loom over the streets of the metropolis.

It would be late evening by the time Mang Vito completes his fourth round trip. By that time, he would have enough only to pay his boundary fee and make a return on what he spent throughout the day for diesel (he spends some P300 on diesel for every round trip). He has to make another round trip so he could earn a little money to take home to his wife and child.

Measly earnings

At the end of the arduous day – which, for Mang Vito, lasts up to 12 midnight or thereabouts – he gets to take home approximately P300 ($6.44 at the exchange rate of $1=P46.555). That is less than what minimum wage earners make in just eight hours of work. (Bulatlat.com)

3 oil minnows face Customs audit

September 25, 2008

The Bureau of Customs will start reviewing the oil importation and shipment records of three small oil companies as part of a drive to boost revenue collection.

The bureau’s Post-Entry Audit Group, headed by Customs Assistant Commissioner Rolando Ligon Jr., will notify Eastern, Flying V and Unioil about the audit.

“We have prepared notices of audit, and we will inform these oil firms that we will conduct a review of their importations for the last year,” Ligon told reporters Wednesday.

He said the audit would also cover the oil importations made by the three oil companies for 2004, 2005 and 2006.

“It does not mean that if you are placed on audit, you are guilty. Let us wait until the audit ends before making any judgment,” Ligon said.

Up next for audit, he added, are oil giants Caltex, Petron and Shell, subjects of the first round of review.

“So far, there has been no evidence of smuggling [against the oil giants], just discrepancy issues,” Ligon said.

Ligon’s team, which Customs Commissioner Napoleon Morales formed to boost revenue collection, was able to collect more than P80 million in additional revenue for the post-entry audit for the last six months.

As of July, the group got P33.5 million (steel), P14.472 million (paper products), P8.631 million (hardware), P3.965 million (motor industry), P3.460 million (electronics), P2.2 million (liquor), P2.7 million (plastic), P1.046 million (general merchandise) and P2.9 million from other classifications.
–Anthony Vargas

=========

My Take:

Hmmm… Could the giants had a hand on this?  Is this a way of suppressing one rival’s growth and maintaining the tri-grip to the oil monopoly in the country?

Just asking…

High Oil Prices Are Here to Stay, Says ADB

September 23, 2008

HONG KONG, CHINA – Developing Asia will face a prolonged period of high and volatile oil prices that will temper growth and force governments around the region to make painful adjustments to policy to encourage increased energy efficiency among consumers, the Asian Development Bank (ADB) says in a new major report.

The Asian Development Outlook 2008 Update (ADO Update) forecasts that the recent drop in oil price will be short lived and that the region’s explosive growth will put further pressure on global oil supply and keep prices elevated above $100 a barrel until at least 2020.

In a comprehensive study of the trajectory of future oil prices and the implications for developing Asia, the report warns that Asia, as a net importer of primary energy, will be hit hard by a prolonged increase in the price of oil.

“High oil prices are here to stay, and the sooner that developing Asia wakes up to this reality the better,” says Ifzal Ali, Chief Economist of the Manila-based multilateral development bank. “The past few years of robust growth in the face of rising oil prices should not delude us into believing that Asia’s growth prospects will be immune from the effects of expensive oil. Looking ahead, a prolonged elevation of oil prices would almost certainly have an adverse impact on Asia’s future growth.”

The report notes that the current oil price surge, which began in 2003, is fundamentally different to previous oil shocks in the 1970s, which were caused by temporary supply disruptions. This time, it says, high oil prices have been mostly driven by surging demand and the inability of suppliers to keep pace.

Developing Asia’s breakneck growth and large appetite for imported energy has already had a significant impact on global oil prices, and the report predicts that the region, together with the Middle East, will continue to place upward pressure on oil prices into the future. Further, the report says, a reduction in surplus oil capacity caused by increased demand – alongside financial speculators betting on higher oil prices – will lead to even greater price volatility in the oil market.

While the report forecasts that higher output and weaker demand will push down prices slightly in the short term, as is now happening, prices will start to soar again in the next decade due to a sustained gap between supply and demand.

Dr. Ali says that the report’s long-term oil forecasts should sound a warning to developing Asia’s policymakers.

“Developing Asia’s oil consumption is three times as high as its oil production and so it cannot afford to ignore the findings of this report. Failure to act today will have larger costs tomorrow. Painful but necessary adjustments will have to be made in the areas of macroeconomic policy as well as energy policy. Above all, policymakers should use a carrot-and-stick approach of subsidies and taxes to encourage the region’s firms and consumers to use oil more efficiently. A welcome trend in this respect is the phase-out of fuel subsidies and price control already underway in the region,” Dr. Ali says.(PinoyPress)

US-Iraq Agreement Leaked

September 17, 2008

leaked version of last month’s draft of the proposed US-Iraq status of forces agreement (SOFA) suggests that the Iraqi parliament may not be consulted before it is signed, despite Prime Minister Nouri al-Maliki’s promises to do so. The pact would govern the future US presence in Iraq. The draft indicates no intent to set a deadline for withdrawal of “noncombat” troops from Iraq. It also grants immunity from Iraqi law to US military personnel, no matter where they are located.

BY MAYA SCHENWAR
T r u t h o u t
Posted by Bulatlat
Vol. VIII, No. 31, September 7-13, 2008

A leaked version of last month’s draft of the proposed US-Iraq status of forces agreement (SOFA) suggests that the Iraqi parliament may not be consulted before it is signed, despite Prime Minister Nouri al-Maliki’s promises to do so. The pact would govern the future US presence in Iraq. The draft indicates no intent to set a deadline for withdrawal of “noncombat” troops from Iraq. It also grants immunity from Iraqi law to US military personnel, no matter where they are located.

The draft was translated and provided to Truthout by Raed Jarrar, Iraq consultant for the American Friends Service Committee. It comes after months of assurances from Maliki that the agreement would be sent to parliament. However, the draft SOFA states, “This agreement goes into effect on the day that diplomatic memos confirming all constitutional procedures have been met in both countries are exchanged,” and sets a December 31 deadline for this memo exchange.

Designating a memo exchange between executive branches as the go-ahead to put the plan into action opens up a gaping loophole, making it simple to bypass parliamentary ratification, according to Jarrar. Since the “constitutional procedures” that are to be followed aren’t specified – and Iraq’s laws are not yet set in stone – the Maliki administration’s lawyers could easily interpret a bilateral executive agreement as constitutional. Unlike parliament, the Iraqi executive branch operates out of the US green zone and is backed by the United States.

“I won’t be surprised if someone in the Iraqi executive branch decides that it is enough to read the agreement before the parliament, or ‘consult’ with them, or pass it as a law with simple majority or whatever other tricks they might pull,” Jarrar told Truthout, adding that the December 31 deadline makes the language even more suspect. “How can they make sure all ‘constitutional procedures’ [are completed] before December 31? What will happen if they are not done?”

The prospect of an impending deadline certainly clashes with hopes of parliamentary approval, according to Dr. Mahmoud Al-Mashhadani, head of the Iraqi parliament. In a rare interview with the news agency Al-Arabiya, Al-Mashhadani stressed that parliament could not even consider a SOFA right now, since a law governing procedures on international agreements has not been passed.

“The Iraqi constitution determines that the House of Representatives must first enact a law to ratify the Law of Treaties and Agreements, and must vote or pass this law through parliament by two-thirds majority,” Al-Mashhadani said. “So, before discussing the treaty, we must enact this law by two-thirds.”

Al-Mashhadani stated that the Law of Treaties and Agreements would “take a long time to pass,” and would “not be enacted before the end of the year.”

Therefore, the SOFA draft deadline would not allow the possibility of parliamentary approval before passage.
Iraq’s executive branch has a history of circumventing the legislature, according to Foreign Policy in Focus Fellow Erik Leaver: The administration did not consult parliament in 2007 when it agreed on the extension of the UN mandate allowing a continuing US presence in Iraq. However, says Leaver, because parliament has been so publicly vocal in its insistence on being involved in the SOFA process, ignoring the legislature may have heavier consequences this time around.

“I would expect a legal challenge in Iraq – and perhaps the US – if the accord moves forward in an exchange of memos,” Leaver told Truthout. “Beyond legal challenges, enormous political pressure would be put upon him, perhaps causing a rise in instability and a certain delay in the scheduled [2008] fall elections in Iraq.”

Jarrar suggested that bypassing parliament may even “lead to some groups quitting the political process.”
Ahmed Ali, an Iraqi correspondent based in Diyala, told Truthout that the possible circumvention of parliamentary approval reveals the nature of the agreement itself: It runs contrary to the wishes of most Iraqi people and their representatives, who would rather all troops leave the country quickly.

“[The SOFA] is superficial,” Ali said. “They are telling Iraqis, ‘You have to accept it; you can say no word.’”

Meanwhile, the American people and their representatives are getting a similarly short end of the stick, according to Steve Fox, director of the American Freedom Campaign, a nonpartisan organization that works to combat executive power abuses. Fox notes that, although SOFAs are usually bilateral executive agreements, the US-Iraq pact goes far beyond the bounds of a traditional SOFA, since it grants US military personnel the authority to continue fighting. (Typical SOFA provisions include US military members’ banking and postal procedures, legal policies relating to military personnel and the transport of Americans’ property into and out of the country.)

“For the past seven years, the president has treated Congress like an inferior branch of government,” Fox told Truthout. “This pending agreement with Iraq is just another example. It is clear that the agreement goes beyond the reach of a traditional SOFA and it should be approved by Congress before it goes into effect. But the president has no intention of seeking Congressional approval. In our opinion, Congress should issue a ’signing statement’ of its own, declaring the agreement unconstitutional and signaling that it will fund the activities outlined in the agreement at its own discretion.”

Timetable for (Partial) Withdrawal

Over the past couple of months, Maliki has firmly advocated a quick, total withdrawal of US troops. Many in Iraq believe that his strong language is intended to sell the SOFA to parliament. However, if parliament is not consulted on the deal, it will likely contain very weak withdrawal guidelines, as outlined in the leaked draft.

The draft states that a deadline will be set to pull out “combat troops,” though the exact date had not been filled in at the time of its release. No timeline is provided for the departure of noncombat troops. Those soldiers would be permitted to linger indefinitely on “installations and areas agreed upon” – the agreement’s lingo for “military bases.”

The “noncombat” designation is notably vague, according to Leaver.

“It doesn’t define what role noncombatant troops would have, nor does it define the potential numbers left behind,” Leaver said, adding that the agreement doesn’t specify what role remaining military contractors would play in a “post-withdrawal” Iraq.

Although its definitions might be murky, the way the agreement’s “withdrawal” plan will be received in Iraq is fairly clear, according to Ali.
“In a word, this arrangement is a new face for the occupation,” Ali said.

Troop Immunity

The SOFA draft grants US troops full immunity from Iraqi law, stating, “The U.S. has exclusive legal jurisdiction over U.S. armed forces members and civilian members inside and outside installations and areas agreed upon.”

Following that clause is a “suggestion” from the Iraqi negotiators, which proposes that US personnel be given immunity “except for intentional crimes and major mistakes.”

“Intentional crimes and major mistakes” are not defined, and according to Jarrar, the “Iraqi suggestions” sprinkled throughout the draft do not hold much water.

“All the Iraqi suggestions show that the Iraqi team doesn’t have much leeway,” Jarrar said.

The generous immunity clause is not standard for SOFAs, according to Joseph Gerson, author of “The Sun Never Sets: Confronting the Network of Foreign Military Bases.” In fact, in countries with more leverage, like Japan and western European nations, US soldiers who commit crimes may well be subject to native law. By seeking blanket immunity for troops in “post-withdrawal” Iraq, the Bush administration is following a treacherous historical pattern.

“Such indemnification is often sought by the Pentagon when new bases are established, and it is as close to a raw practice of imperialism as one can imagine,” Gerson told Truthout.

Leaver notes that the wide-open immunity clause coincides with a high prevalence of US-inflicted civilian casualties in Iraq, leaving victims of those crimes with no recourse.

According to Ali, that’s an untenable loophole.

“The US troops should be tried by Iraqi law,” Ali said. “Every day, they kill people by mistake. Let’s imagine that whole case in the United States, what the result would be – can you?” Truthout/Posted by Bulatlat

Bush Said to Give Orders Allowing Raids in Pakistan

September 17, 2008

President Bush secretly approved orders in July that for the first time allow American Special Operations forces to carry out ground assaults inside Pakistan without the prior approval of the Pakistani government, according to senior American officials.

BY ERIC SCHMITT and MARK MAZZETTI
New York Times
Posted by Bulatlat
Vol. VIII, No. 32, September 14-20, 2008

WASHINGTON — President Bush secretly approved orders in July that for the first time allow American Special Operations forces to carry out ground assaults inside Pakistan without the prior approval of the Pakistani government, according to senior American officials.

The classified orders signal a watershed for the Bush administration after nearly seven years of trying to work with Pakistan to combat the Taliban and Al Qaeda, and after months of high-level stalemate about how to challenge the militants’ increasingly secure base in Pakistan’s tribal areas.

American officials say that they will notify Pakistan when they conduct limited ground attacks like the Special Operations raid last Wednesday in a Pakistani village near the Afghanistan border, but that they will not ask for its permission.

“The situation in the tribal areas is not tolerable,” said a senior American official who, like others interviewed for this article, spoke on condition of anonymity because of the delicate nature of the missions. “We have to be more assertive. Orders have been issued.”

The new orders reflect concern about safe havens for Al Qaeda and the Taliban inside Pakistan, as well as an American view that Pakistan lacks the will and ability to combat militants. They also illustrate lingering distrust of the Pakistani military and intelligence agencies and a belief that some American operations had been compromised once Pakistanis were advised of the details.

The Central Intelligence Agency has for several years fired missiles at militants inside Pakistan from remotely piloted Predator aircraft. But the new orders for the military’s Special Operations forces relax firm restrictions on conducting raids on the soil of an important ally without its permission.

Pakistan’s top army officer said Wednesday that his forces would not tolerate American incursions like the one that took place last week and that the army would defend the country’s sovereignty “at all costs.”

It is unclear precisely what legal authorities the United States has invoked to conduct even limited ground raids in a friendly country. A second senior American official said that the Pakistani government had privately assented to the general concept of limited ground assaults by Special Operations forces against significant militant targets, but that it did not approve each mission.

The official did not say which members of the government gave their approval.

Any new ground operations in Pakistan raise the prospect of American forces being killed or captured in the restive tribal areas — and a propaganda coup for Al Qaeda. Last week’s raid also presents a major test for Pakistan’s new president, Asif Ali Zardari, who supports more aggressive action by his army against the militants but cannot risk being viewed as an American lap dog, as was his predecessor, Pervez Musharraf.

The new orders were issued after months of debate inside the Bush administration about whether to authorize a ground campaign inside Pakistan. The debate, first reported by The New York Times in late June, at times pitted some officials at the State Department against parts of the Pentagon that advocated aggressive action against Qaeda and Taliban targets inside the tribal areas.

Details about last week’s commando operation have emerged that indicate the mission was more intrusive than had previously been known.

According to two American officials briefed on the raid, it involved more than two dozen members of the Navy Seals who spent several hours on the ground and killed about two dozen suspected Qaeda fighters in what now appeared to have been a planned attack against militants who had been conducting attacks against an American forward operating base across the border in Afghanistan.

Supported by an AC-130 gunship, the Special Operations forces were whisked away by helicopters after completing the mission.

Although the senior American official who provided the most detailed description of the new presidential order would discuss it only on condition of anonymity, his account was corroborated by three other senior American officials from several government agencies, all of whom made clear that they supported the more aggressive approach.

Pakistan’s government has asserted that last week’s raid achieved little except killing civilians and stoking anti-Americanism in the tribal areas.

“Unilateral action by the American forces does not help the war against terror because it only enrages public opinion,” said Husain Haqqani, Pakistan’s ambassador to Washington, during a speech on Friday. “In this particular incident, nothing was gained by the action of the troops.”

As an alternative to American ground operations, some Pakistani officials have made clear that they prefer the C.I.A.’s Predator aircraft, operating from the skies, as a method of killing Qaeda operatives. The C.I.A. for the most part has coordinated with Pakistan’s government before and after it has launched missiles from the drone. On Monday, a Predator strike in North Waziristan killed several Arab Qaeda operatives.

A new American command structure was put in place this year to better coordinate missions by the C.I.A. and members of the Pentagon’s Joint Special Operations Command, made up of the Army’s Delta Force and the Navy Seals.

The move was intended to address frustration on the ground about different agencies operating under different marching orders. Under the arrangement, a senior C.I.A. official based at Bagram air base in Afghanistan was put in charge of coordinating C.I.A. and military activities in the border region.

Spokesmen for the White House, the Defense Department and the C.I.A. declined to comment on Wednesday about the new orders. Some senior Congressional officials have received briefings on the new authorities. A spokeswoman for Senator Carl Levin, a Michigan Democrat who leads the Armed Services Committee, declined to comment.

American commanders in Afghanistan have complained bitterly that militants use sanctuaries in Pakistan to attack American troops in Afghanistan.

“I’m not convinced we’re winning it in Afghanistan,” Adm. Mike Mullen, the chairman of the Joint Chiefs of Staff, told the House Armed Services Committee on Wednesday. “I am convinced we can.”

Toward that goal, Admiral Mullen said he had ordered a comprehensive military strategy to address the border region between Pakistan and Afghanistan.

The commando raid last week and an increasing number of recent missile strikes are part of a more aggressive overall American campaign in the border region aimed at intensifying attacks on Al Qaeda and the Taliban in the waning months of the Bush administration, with less than two months to go before November elections.

State Department officials, as well as some within the National Security Council, have expressed concern about any Special Operations missions that could be carried out without the approval of the American ambassador in Islamabad.

The months-long delay in approving ground missions created intense frustration inside the military’s Special Operations community, which believed that the Bush administration was holding back as the Qaeda safe haven inside Pakistan became more secure for militants.

The stepped-up campaign inside Pakistan comes at a time when American-Pakistani relations have been fraying, and when anger is increasing within American intelligence agencies about ties between Pakistan’s Inter-Services Intelligence Directorate, known as the ISI, and militants in the tribal areas.

Analysts at the C.I.A. and other American spy and security agencies believe not only that the bombing of India’s embassy in Kabul, Afghanistan, in July by militants was aided by ISI operatives, but also that the highest levels of Pakistan’s security apparatus — including the army chief, Gen. Ashfaq Parvez Kayani — had knowledge of the plot.

“It’s very difficult to imagine he was not aware,” a senior American official said of General Kayani.

American intelligence agencies have said that senior Pakistani national security officials favor the use of militant groups to preserve Pakistan’s influence in the region, as a hedge against India and Afghanistan.

In fact, some American intelligence analysts believe that ISI operatives did not mind when their role in the July bombing in Kabul became known. “They didn’t cover their tracks very well,” a senior Defense Department official said, “and I think the embassy bombing was the ISI drawing a line in the sand.” New York Times/posted by Bulatlat

Despite Rollback, Real Transparency Remains Urgent

September 17, 2008

The urgency for real transparency in the domestic oil industry remains despite the recent rollback in oil prices, and vital information needs to be disclosed for the public to be assured that the monopolized domestic oil industry is not profiting at their expense.

BY IBON FOUNDATION
Posted by Bulatlat
Vol. VIII, No. 32, September 14-20, 2008

The urgency for real transparency in the domestic oil industry remains despite the recent rollback in oil prices, and vital information needs to be disclosed for the public to be assured that the monopolized domestic oil industry is not profiting at their expense.

The public has been put at the mercy of the oil firms and their mysterious pricing schemes, and is left to take the oil companies’ word that their prices are fair and their profits reasonable. There are data that oil firms need to disclose to ensure the public that their welfare is not being jeopardized.

Among others, this information includes: 1) the retail pricing formulas and strategies of the oil firms domestically and as they relate to their foreign mother corporations; 2) the overseas supply sources and the terms and periods of their supply contracts; 3) any payments local firms make to mother firms whether as profit shares, charges for technologies or services, fees and other payments; 4) refinery stocks and capacity; 5) inventories and storage capacity; 6) local sales and distribution to direct buyers, retailers and other oil firms.

While some of this information is already reported or otherwise available, others such as supply contracts have unfortunately been claimed as “confidential” by the oil companies. This information will not just address legitimate public doubts but also be vital in assisting policy makers and legislators in developing responsible energy policies.

IBON believes that the oil deregulation law has clearly failed to introduce effective competition in the downstream oil industry which remains subject to monopoly control and domination by the Big Three oil firms. It has merely allowed the global oil monopolies to freely pass on inflated crude oil prices and given the domestic oil firms license to price as they see fit, at the expense of Filipino consumers.

Oil is a critical sector with far-reaching impacts on the public welfare and cannot be allowed to operate on a largely profit-maximizing basis, said the think-tank. Real transparency is thus crucial for public interest to prevail. Posted by Bulatlat

Pump Prices Still Above Normal Levels

September 17, 2008

Even as world crude prices have gone down to approximately their January 2008 levels, current pump prices are still above the averages for the period January-March 2008.

BY ALEXANDER MARTIN REMOLLINO
Bulatlat
Vol. VIII, No. 32, September 14-20, 2008

Press Sec. Jesus Dureza said, in a press conference Sept. 12, that the recent rollback in oil prices by P2 to P3 is a “big argument against those who are shouting deregulation;” although the Press Secretary might have meant “regulation” as militant groups are calling for the scrapping of the Downstream Oil Industry Deregulation Act and for the regulation of oil prices.

Demands for the repeal of the 12 percent value-added tax (VAT) on petroleum products and the scrapping of the Downstream Oil Industry Deregulation Act have intensified during the first half of the year amid a series of oil price hikes starting last January. Oil price hikes severely affected the prices of commodities, as petroleum products are used in the production and transportation of goods.

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. World crude prices increased at a seeming uncontrollable pace with projections that it would hit $200 per barrel. But they peaked at $147 per barrel before they went down steadily. Mainstream analysts claimed that diminishing oil reserves, weather disturbances, and geopolitical factors such as the impending war between the US and Iran caused prices to rise; although some attribute it to a speculation frenzy in the oil futures market, especially after the sub-prime mortgage crisis in the US when hedge fund managers lost millions of dollars.

In the Philippines, oil companies have implemented a total of seven rollbacks since last August. These rollbacks have brought down prices by P8.50 ($0.18 at the Sept. 12 exchange rate of $1:P46.86) a liter for gasoline and P6.50 ($0.14) for diesel.

But according to Arnold Padilla of Bagong Alyansang Makabayan’s (Bayan or New Patriotic Alliance) Public Information Department, oil companies should have implemented bigger rollbacks in the prices of their products, considering that crude oil prices in the world market have gone back to the level they were at during the first quarter of 2008.

The following table, based on data from the Department of Energy (DoE), show the monthly average retail prices of diesel and gasoline from December last year to August this year:

Monthly Average Retail Prices of Unleaded Gasoline and Diesel
(December 2007-August 2008)

Average retail price

as of

Unleaded

(P/liter)

Diesel

(P/liter)

23 Aug 2008

55.96

54.94

30 Jul 2008

60.46

60.02

30 Jun 2008

59.46

52.44

27 May 2008

51.96

44.94

30 Apr 2008

47.96

40.94

31 Mar 2008

46.46

39.44

26 Feb 2008

43.96

36.94

29 Jan 2008

44.45

38.45

26 Dec 2007

44.45

38.45

Source: Department of Energy

World crude prices in the oil futures market first hit the $100/barrel mark in January this year, while its spot price was around $92.93. The local pump price of unleaded gasoline in January was at P44.45 ($0.948) per liter and diesel at P38.45 ($0.82). World crude prices in the futures market hit $103/barrel in February and $110/barrel in March, with spot prices reaching $93.51 in February and $99.32 in March. Local pump prices in February and March ranged from P43.96 to P46.46 ($0.938 to $0.99) for unleaded gasoline and from P36.94 to P39.44 ($0.788 to $0.84) for diesel.

Brent crude oil for October delivery last traded at $99.43 and light, sweet crude at New York Mercantile Exchange at $101.74. Spot prices range between $93.06, for oil from the Urals, to $104.04 for Louisiana sweet oil. Local pump prices now range from P51.25-52.85 ($1.09-1.13)/liter for unleaded gasoline, and P48.95-51.09 ($1.04-1.09)/liter for diesel.

The current range of pump prices for unleaded gasoline and diesel is visibly still above the monthly averages for the period January-March 2008, bolstering the claims of drivers and militant organizations that the current oil price rollbacks are not enough.

“Clearly, oil price slides in the world market do not automatically translate into proportionate rollbacks in the local market,” Padilla said in an interview.

“This happens because the oil industry is deregulated,” Padilla pointed out.

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.

Mrs. 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.

Arguments for regulation

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.

Padilla also said that the deregulation of the oil industry has made the Philippines more vulnerable to the effects of speculation in the world market.

Last June, four market analysts testified at a US Senate hearing, that speculation accounted for 30 percent of world oil prices.

Michael Masters of Masters Capital Management said that if the US Congress passed a law limiting speculation, the price of oil would drop closer to marginal price of $65/75/barrel. Fadel Gheit of Oppenheimer & Co., Edward Krapels of Energy Security Analysis, and Roger Diwan of PFC Energy Consultants agreed with Masters.

“Record oil prices are inflated by speculation and not justified by market fundamentals,” Gheit said. “Based on supply and demand fundamentals, crude-oil prices should not be above $60 per barrel.”

The $60 to $65 per barrel range was the average price of crude oil from 2005-2007.

Padilla said that regulation would protect the people both from the effects of speculation in the world market and local oil companies’ profiteering because any increase would have to be approved by the government. Another proposal being put forward by militant groups is centralized procurement of oil.

“With centralized procurement, it is the government that is in charge of importing our oil requirements,” Padilla said. “The government thus can enter into bilateral agreements in which both parties agree not to be affected by speculation,” he explained.

“Also, with centralized procurement, the government would have a sense of the actual costs of oil, unlike the situation right now in which we cannot tell the real costs,” he added. “The government can therefore call the oil companies to task if they peg their prices way above the costs of importing oil.” Bulatlat

Editorial Cartoon: (Oil Problem) Abuloy

September 13, 2008

Generousity?

Lifting of Oil Vat Could Have Mitigated High Inflation — Ibon

September 7, 2008

As inflation in the country rose to its highest in nearly 17 years, independent think-tank IBON Foundation says that while unavoidable, inflation could have been moderated if government had not insisted on taxing the people through the oil value-added tax (VAT).

The National Statistics Office reported that high fuel costs drove the inflation rate to a 12.5% high in August. According to IBON, the removal of VAT on oil would have immediately brought down the cost of fuel prices by 12 percent. Pump prices are estimated to go down by P4 a liter and liquefied petroleum gas (LPG) by P60 per 11-kg cylinder without the VAT on oil. These could have brought immediate relief to millions of Filipinos through savings on their fuel bills, while bringing down production costs of fuel-intensive establishments.

High prices of commodities could also have been mitigated if government had not surrendered control over the oil industry by maintaining oil deregulation.

Inflaton bears most heavily on the poor who already struggle with record joblessness and falling incomes. But government continues to implement the RVAT in its obsession to reduce the budget deficit and continue servicing its public debt. For the people, however, all these have only meant higher prices and drastic cuts in income, consumption and welfare. (end)

IBON Foundation, Inc. is an independent development institution established in 1978 that provides research, education, publications, information work and advocacy support on socioeconomic issues.

Rollbacks Welcome but Pricing Transparency Still Necessary

August 21, 2008

The recent series of petroleum pump price rollbacks are welcome but oil firms should be transparent with their pricing particularly in the wake of windfall profits earned by oil firms due to record-high world crude prices.

BY IBON FOUNDATION
Posted by Bulatlat
Vol. VIII, No. 28, August 17-23, 2008

The recent series of petroleum pump price rollbacks are welcome but oil firms should be transparent with their pricing particularly in the wake of windfall profits earned by oil firms due to record-high world crude prices.

According to IBON research head Sonny Africa, how the oil firms determine pricing and the amount of rollback remains a mystery.

Unless these firms reveal their pricing structure, the public remains captive to the whims of oil companies and dependent on the government’s “moral persuasion,” he added.

Because of the practice of transfer pricing by global oil firms, it has become increasingly difficult for the Department of Energy (DoE) and other stakeholder groups to determine how much local pump prices should move in relation to global oil prices and the peso-dollar exchange rate. Through transfer pricing, oil transnational firms are able to artificially bloat the price of oil as it passes through the different stages of production and the distribution chain, which they control.

Global oil prices whether Dubai spot crude or Mean of Platt’s Singapore, which are the benchmarks that oil firms use in determining local pump prices, are unreliable as they are bloated by speculation.

A 2006 study by the U.S. Senate showed that 30 percent or more of world crude oil prices are driven by speculation. Locally, IBON estimates that prevailing pump prices of unleaded gasoline are overpriced by 23 percent because of speculation.

”Oil firms have been allowed to further achieve monopoly control over the industry because of deregulation, which makes urgent the need for government regulation and control over the local oil sector to help ensure transparency in pricing,” said Africa. Posted by Bulatlat

Pagtaas ng presyo ng gasolina, inugat ng IBON, Piston

August 19, 2008

BAGUIO CITY — “Hindi tayo nauubusan ng pamamaraan para sa tumataas na presyo ng langis, ang may problema lamang ay ang hindi sensitibong pamahalaan.”

Ito ang ipinahayag ni Mandy Felicia, pangulo ng pool of speakers ng IBON Foundation sa Forum ng Pagkakaisa ng mga Samahan ng Tsuper at Operators Nationwide (Piston) noong Agosto 14, sa Sangkabalayan Hall ng Immaculate Conception Cathedral dito.

Idiniin ni Felicia na ang isyu tungkol sa langis ay hindi lamang isyu ng sektor ng transportasyon kundi isyu ng bawat Pilipino.

“Lahat ay gumagastos, lahat ay apektado,” aniya. Bago simulan ang pagsasabi ng iba’t ibang solusyon, inilahad muna ni Felicia ang dahilan kung bakit tumataas ang presyo ng langis.

Iba-ibang dahilan

Sinasabi ng gobyerno na mayroon tayong matinding pangangailangan at kakulangan sa langis kaya tumataas ang presyo nito.

Isang dahilan ay ang giyera na umiiral sa Gitnang-Silangan, ayon sa mga tagapagsalita ng gobyerno. Noong Disyembre nang nakaraang taon ang presyo ng langis mula sa krudo ng Dubai na ating inaangkat ay $100 bawat bariles.

Noong Enero ng taong ito ay naganap ang pinakamataas na pagtaas ng presyo ng langis sa kasaysayan na umaabot sa $217 bawat barrel.

Mas malalim na pagtingin

Subali’t sinabi ni Felicia na sa tingin ng mga siyentista, mayroon namang 1.3 milyong bariles na reserba ng langis para paandarin ang lahat ng sasakyan at makinarya sa buong daigdig sa susunod na 42 taon.

Isa pa, ayon sa datos mula sa International Energy Association(IEA), mas marami namang suplay kaysa sa pangangailangan. Kung minsan pumapantay ang suplay sa pangangailangan pero hindi pa nito nalalagpasan ang suplay kahit kailan, ayon kay Felicia.

Ang Saudi Arabia ang may pinakamalaking reserba ng langis na higit sa 56 %. Tinatayang 2 % naman ang bahagi ng Estados Unidos. Maaari aniya na kaya pinag-iinitan ng Estados Unidos ang Gitnang-Silangan dahil sa paghahangad na makuha ang reserba ng langis sa naturang lugar.

Hindi ang mga may-ari ng pinakamalalaking reserba ng langis ang kumikita sa produkto dahil pinakamaliit ang kanilang bahagi sa pagrerepina nito. Hawak ng transnational companies(TNCs) ang pamilihan.

Dahil TNCs ang may hawak ng merkado, sila rin ang nagtatakda ng presyo.

“Paano sila ngayon malulugi kung sa isang araw ay bilyon ang kanilang kinikita,” dagdag pa ni Felicia.

Balik-kasaysayan

Noong 1992, nilagdaan ni dating Pangulong Fidel V. Ramos ang Republic Act 7638 para maging pribado ang kumpanyang Petron. Dating pag-aari ito ng pamahalaan at mayroong basehan ang ibang mga kumpanya ng gasolina at langis upang hindi masyadong taasan ang presyo. Ngayon at pribado na ito, hindi na kontrolado ang pagtaas ng presyo.

Kapalit ng Republic Act (RA) 8180 o ang oil deregulation law na idineklara noong 1994 ay ang pangako ng International Monetary Fund (IMF) na pautang ng $600 para sa bansa. Subali’t naideklara naman itong hindi ayon sa Konstitusyon ayon sa Supreme Court. Pinalitan ito ng RA 8749 na halos wala rin namang ipinagkaiba sa nilalaman.

Labindalawang taon matapos ang unang oil deregulation law, dominado pa rin ng Big Three TNCs (Dambuhalang Tatlong Kumpanya) o ng Shell, Caltex at Petron ang lokal na industriya at pamilihan ng langis.

Ayon naman kay Pangulong Gloria Macapagal-Arroyo na senador pa lamang noon, Free Market (Malayang kalakalan) ang ikabubuti ng oil deregulation law dahil kung mas maraming kumpetisyon, mas mumura ang presyo.

Subali’t kabaligtaran ang nangyari dahil mas madali na para sa mga TNC’s ang pagmamanipula sa pamilihan dahil nga wala kahit isang kumpanya ng langis ang kontrolado ng pamahalaan. Halos 400% ang kinkita ng mga ito sa patuloy na pagtaas ng presyo.

Nagayon sa 12 % na Value Added Tax (VAT) sa mga petrolyo, maging ang pamahalaan ay kumikita rito.

Ayon kay Felicia, ang ugat ng pagtaas ng presyo ng langis ay ang sabwatan ng dayuhang korporasyon ng langis (TNCs) at ng gobyernong Arroyo.

Mga pamamaraan

Marami namang maaaring solusyon sa mga problemang ito ayon pa kay Felicia. Ilan sa mga ito ay ang alisin ang RVAT; ibasura ang batas sa deregulasyon; kontrolin ang presyo; pagrolbak sa presyo ng langis; bawiin ang Petron; at pagsasabansa bilang pangmatagalang alternatibo.

Puwede rin naman, aniya, na mag-import tayo ng langis sa ibang bansa at palitan natin ng mga produktong pang-agrikultura. Sa gayon, kahit papaano, makakahinga ang bawat Pilipino sa pagdurusang dulot ng pagtaas ng presyo ng langis at iba pang produkto. # Maria Lalaine Gulan(NorthernDispatch)

SC orders Chevron to pay P1-B in back taxes

August 18, 2008

By William B. Depasupil, Reporter

The Supreme Court (SC) has ordered Chevron Philippines Inc., one of the three biggest petroleum firms in the country, to pay government some P1 billion in unpaid duties and taxes for oil imported 12 years ago.

In a 35-page ruling penned by Justice Renato Corona, the Court’s First Division ordered the oil firm “to pay the amount of P893.78 million plus 6 percent legal interest per annum accruing from the date of the promulgation of the decision until its finality.”

Chevron, formerly Caltex Phils. Inc., can file a motion for reconsideration before the High Court.

The petroleum firm incurred the tax deficiency between March 8 and April 10, 1996, covering shipments of 354 million liters of crude oil, six million liters of reformate, and 16 million liters of feed stock.

The oil firm, according to court records, filed the required import entry more than 30 days after the shipment had arrived and was appraised a 3 percent duty, as provided by Republic Act 8180 or the Downstream Oil Industry Regulation Act of 1996, which became effective on April 16, 1996. Prior to the effectivity of that law, the duty on crude oil was 10 percent.

Three years later, then Department of Finance Secretary Edgardo Espiritu received an anonymous tip claiming the deliberate concealment, manipulation and scheme by Chevron and Pilipinas Shell in the importation of crude oil resulting in huge revenue losses for the government.

Avoiding to pay the 10-percent rate

It was found out during the investigation that Chevron filed a late declaration of its oil import for to avoid paying the 10-percent rate of duty and be entitled to pay only 3 percent as provided for under the law.

On August 1, 2000, the district collector of Customs at the Port of Batangas sent a demand letter to Chevron for the immediate settlement for the discrepancy in its tax payment.

Also, an investigation by the Bureau of Customs showed that the import entries for the questioned oil importation were filed by Chevron beyond the 30-day, non-extendible period prescribed under the Tariff and Customs Code.

With the violation, the oil shipments were already considered abandoned and seized in favor of the government.

Tax officials concluded that the fraud was made in collusion with the former Port of Batangas district collector. It also ordered Chevron to pay P 1.1 billion, representing the total dutiable value of the importations.

On appeal, the Court of Tax Appeals (CTA) also ruled that the oil firm was liable for deficiency in customs duties.

The Supreme Court pointed out that as a general rule, the CTA’s findings and conclusions are accorded great respect and are generally upheld by the High Court. (ManilaTimes)

===================

My Take:

May the SC continue this kind of work.  At least they’re making my hope for this country stand firm.

Poor Pays 90% of VAT on Power, Oil – Expert

August 5, 2008

Using government data, Ramon Ramirez, electrical engineer and spokesperson of People Opposed to Warrantless Electricity Rates, revealed that the poor pays for 90 percent of the VAT on oil and power.

BY RONALYN V. OLEA
Bulatlat
Volume VIII, Number 26, August 3-9, 2008

The poor and the middle class who probably expected that some measure of relief would be announced by Mrs. Gloria Macapagal-Arroyo during her State of the Nation Address (SONA) last July 28 may have been disappointed. A substantial portion of President Arroyo’s SONA was devoted to defending the administration’s insistence in retaining the value-added tax (VAT) on oil and power.

Arroyo said, “Kapag ibinasura ang VAT sa langis at kuryente, ang mas makikinabang ay ang mga may kaya na kumukonsumo ng 84 porsyento ng langis at 90 porsyento ng kuryente habang mas masasaktan ang mahihirap na mawawalan ng P80 billion para sa mga programang pinopondohan ngayon ng VAT. Take away VAT and we strip our people of the means to ride out the world food and energy crisis.” (If the VAT on oil and power is scrapped, the well-to-do who consume 84 percent of oil and 90 percent of power will benefit while the poor who stand to lose P80 billion [$1,808,931,599 at an exchange rate of $1=P44.225] for programs funded by VAT will suffer.)

However, government data belie her claim that the rich pay 84 to 90 percent of the VAT.

Power

Electrical engineer Ramon Ramirez, spokesperson of People Opposed to Warrantless Electricity Rates (Power) and convenor of Agham (Science and Technology for the People) said, “It is not the well-to-do but the majority of the people, which includes the poor, who pay 90 percent of the VAT on power, directly and indirectly.”

Data from the Department of Energy (link – http://www.doe.gov.ph/EP/Powerstat.htm ) show that in 2007, electricity sales by sectors were as follows:

pie graph

Ramirez said that while the industrial and commercial sectors consumed 62.4 percent of the electricity, the companies promptly passed on the VAT on power to the buyers of their products and services — the consumers, which include the poor and the vast majority of the people.
He maintained, “Thus, the consumers themselves, not the owners of the companies, ultimately paid the VAT on power.”

Ramirez said that the 3.4 percent consumed by street lighting, public buildings and the like and the VAT paid for them came from the people’s taxes. “Therefore, the VAT on the total of the three items, 66 percent, was paid indirectly by the people, not the rich,” he said.

Analyzing the data from Meralco’s latest breakdown of residential consumers, Ramirez said that the well-to-do who are presumably consuming more than 500 kilowatt-hour per month consumed only 28 percent of the total power delivered to homes, or 28 percent of the 34.11 percent in residential sales. This amounts to a mere 9.55 percent of the total power consumed.

Ramirez said that this means that relative to the nationwide power consumption in the DOE data, only about 10 percent of the VAT on power were paid for by the well-to-do and the rich.

Oil

Based on various government data, millions of poor people who directly consume petroleum products pay millions of VAT daily.

Daily, hundreds of thousands of jeepney drivers pay P67.95 million ($1,536,527 at an exchange rate of $1=P44.225) in VAT and tricycle drivers, P14.12 million ($319,292), for the fuel they consume. Thousands of fishermen using motorized bancas pay a total of P8.85 million ($200,113) in VAT per fishing trip.

More than nine million kerosene users pay P218.32 million ($4,936,673) for VAT per month. Kerosene is used primarily by the poor for cooking and lighting.

Estimated VAT Paid Daily/Monthly by Consumers of Petroleum Products

Ave. cost

Jan-July 2008

VAT

No. of direct consumers

Average

consumption

Total VAT Paid

Daily/Monthly

Diesel – P44.23/liter

P5.31

426, 572 jeepney drivers

30 liters/day

P67, 952, 920

Gas – P50.55/liter

P6.07

581,578 tricycle drivers

4 liters/day

P14, 120, 714

P6.07

177,000 fishermen with bancas

7.5 L /fishing trip

P8,057, 925

11-kg cylinder LPG – P587.57

P70.51

8.6 million households

1 tank/month

P606, 386,000

Kerosene –

P46.15/liter *

P5.53

9.4 million

households

4.2 L/month

P218, 324,400.00

* As of May 2008 only

Source of basic data: Oil Price Watch Department of Energy <http://www.doe.gov.ph/OPM/Oilmonitor.htm > , Land Transportation Office 2007 report, National Statistics Office 2004 Household Energy Consumption Survey, Piston, Pamalakaya

Based on the above data covering the period January to July 2008, the poor directly paid around P20.55 billion ($464,669,304) in VAT.

Estimated VAT Paid Directly by Poor Consumers, January to July 2008

Estimated Total VAT Paid

Jeepney drivers

P14,270,113,116

Tricycle drivers

P 2,965,349,906

Fishermen

P1,692,164,250

Kerosene users

P 1,528,270,800

TOTAL

P20,555,898,122

Added to this, taxpayers, including minimum wage earners, also pay for the oil consumption of government offices and government-owned and-controlled corporations (GOCCs).

Data from the Commission on Audit’s (COA) 2006 Annual Financial Report of the National Government show that the government spent P2.82 billion ($63,764,838) for gasoline, oil and other lubricants expenses.

The COA report shows that the top spenders of gasoline, oil and lubricants were the Department of National Defense and the Department of Interior and Local Government with P83 million ($3,670,675,000) and P63 million ($2,786,175,000), respectively.

The average retail price of gasoline then was P39.41 ($0.89) per liter and diesel, P34.46 ($0.779) per liter. Assuming that the consumption is constant, the 28 percent increase in the prices of petroleum products from 2006 to 2008 would mean that the government would spend P3.61 billion ($81,628,038) for the same items this year. From this amount, the 12 percent VAT shouldered by the taxpayers would be P379 million ($8,569,813).

Based on the Projected Oil Demand by Sector taken from the Philippine Energy Plan of 2006, below is the projected oil consumption in 2007:

A.1.2a Projected Oil Demand By Sector.xls


barrels in millions

Percentage

Power Generation

12.389

10.7

Residential

11.292

9.7

Transport

66.487

57.2

Industrial

17.212

14.8

Commercial

5.986

5.2

Agriculture

2.861

2.5

Total

116.227

100.0

Based on the above data, Ramirez noted that excluding the transport sector, the public pays 42.8 percent of the VAT on oil. He explained that the VAT on power generation is passed on to consumers as part of the generation charge. Ramirez said that factory owners and businessmen who comprise the industrial and commercial sectors also pass on the VAT to consumers. Oil consumption by residential and agriculture sectors is also paid for by the public.

Considering that the rich pays for only 10 percent of the total consumption of electricity, it may be concluded that they would shoulder only 10 percent of the oil consumption for power generation and of residences. And while the rich shares in paying for the oil consumption of industrial and commercial establishments as consumers, it is highly improbable that they, who constitute only around 5 to 10 percent of the population, would consume 84 percent of the products of commercial establishments even as they corner 35.9 percent of the total income.

Ramirez said, “This data alone already refutes Arroyo’s claim of 84 percent share by the rich.”

The breakdown of the projected oil consumption of the transport sector, which constitutes 57.2 percent of the total is as follows:

Cars

751,092

13.6%

Utility vehicles (UV)

1,602,619

29.0%

Sports utility vehicles (SUV)

192,991

3.5%

Truck

281,261

5.1%

Buses

30,159

0.5%

Motorcycles and tricycles (MC/TC)

2,647,574

47.9%

Trailer

24,356

0.4%

TOTAL:

5,530,052

100%

Source: Land Transportation Office (LTO) statistics

Ramirez said that of the above, the VAT on oil used by trucks, buses, trailers, tricycles is eventually and indirectly paid for by the public, since these are passed on to them as matter of business operating practice.

In 2001, the LTO statistics show that the government owns 4,089 cars and 1,255 sports utility vehicles (SUVs). This means that private car owners comprise less than 16 percent of the transport sector.

Thus, the estimated share of the rich in the VAT on oil is only 9.15 percent. In other words, 90.85 percent of the public directly and indirectly pays for the VAT on oil.

Shortchanged

In a separate statement, the Bagong Alyansang Makabayan (Bayan or New Patriotic Alliance) revealed that the national government may have collected as much as P1.8 billion ($40,700,966) in VAT from Meralco’s lifeline customers alone. The amount, according to Bayan, is P1 billion pesos ($22,611,644) more than the actual subsidy given.

Lifeline users are those consuming 100 kilowatt hour or less per month. The government gave a one-time P500 ($11.30) power subsidy for lifeline customers last month. For 1.7 million Meralco lifeline customers, the government spent P852 million ($19,265,121) for the one-time subsidies, Bayan said.

In her SONA, however, Arroyo said her government allocated P2 billion ($45,223,289) as power subsidy for four million poor Filipinos.

Bayan estimated that for 32 months, 50kWh-consumers paid a total of P470 ($10.627) each in VAT; 70kWh paid a total of P970 ($21.93); and those who consume 100kWh paid a total of P1,830 ($41.379) each in VAT.

Ramirez said, “Only a fraction of the collected VAT is doled out to the poor as subsidies under the signboard “Katas ng VAT para sa mahirap.” (VAT Revenues for the Poor)

In a statement, independent think tank IBON Foundation said that so far, only P9.3 billion ($210,288,298) or just half of the estimated P18.6 billion ($420,576,596) in windfall RVAT revenues is going to subsidies. This leaves another P9.3 billion ($210,288,298) unaccounted for inasmuch as another P2 billion ($45,289,223) in “subsidies” that had been hyped are merely loans that still have to be repaid.

It added that the administration’s “Katas ng VAT” is “a pretense to cover up how the largest part of reformed value-added tax (RVAT) revenues do not go to social programs but rather to paying off debt, militarism and political patronage to prop up Arroyo’s unprecedented unpopular rule.”

The independent think tank also criticized the Arroyo government for making it appear that the share going to social programs is larger than reality. IBON cited the Department of Finance report in 2006 stating that 30 percent or P23.5 billion ($531,373,657) of additional RVAT revenues went to social and infrastructure expenditures. However, the actual amount that went to social services was just P8.4 billion ($189,937,817) or only 11 percent of RVAT revenues.

IBON said further, “In contrast, the administration still insists, in the face of the people’s worsening problems, on allotting some 24 percent of the national budget to interest payments on debt.”

The government is paying P634 billion ($14,335,782,928) in total debt service in 2008 covering interest and principal payments.

Correct math

IBON said that the so-called pro-poor subsidies also do not have any lasting effect for the people who suffer record joblessness, rising prices and worsening poverty.

Ramirez asserted, “Correct math on hard data tells us that the people are better helped by removing the VAT on oil and power, and with the bonus that they have their dignity intact.” Bulatlat

Satur urges House to probe oil firm

August 3, 2008

MANILA — Militant legislators in the House of Representatives are pushing for a full-blown investigation into “the oil companies’ alleged engagement in overpricing, profiteering, transfer pricing and other forms of cartel operations in the Philippines.”

House Deputy Minority Leader and Bayan Muna Rep. Satur Ocampo, in filing House Resolution 677, said that “the House Committee on Trade and Industry has the mandate and golden opportunity to help the suffering people by conducting an investigation on Pilipinas Shell, Chevron Philippines (formerly Caltex), and Petron who have increased pump prices 22 times this year.”

“For the June 2007 to June 2008 period, average pump prices of unleaded gasoline and diesel have increased by 47% and 52%, respectively. This has jacked up prices of food, rice and public transport fares that are heightening the sufferings of the people,” he added.

Royal Dutch Shell, the mother company of Pilipinas Shell Petroleum Corp., posted a net profit of $27.6 billion in 2007, making it the second most profitable company in the world next to oil giant Exxon Mobil. That year, Pilipinas Shell posted profits worth P4.12 billion. Chevron Corp., mother unit of Chevron Philippines, posted a net profit of $18.7 billion in 2007, 9% higher than a year earlier, making it the eighth most profitable company in the world. Its local unit posted P2.75 billion in profits. Petron’s former partner, Saudi Aramco, posted profits of around $15 million in 2007. Petron earlier posted a 31% dip in net income to P658 million in the first quarter.

“Domestic profits do not fully reflect the oil monopolies’ overall profits because the transnational oil firms’ local subsidiaries are merely booking their profits abroad through the deceitful practice of transfer pricing to deflect criticisms of their massive windfall profits,” Ocampo said.

The independent think tank IBON Foundation has disputed the three top oil firms’ claim of under-recoveries as their mother companies, the group said, “continue to gain billions of profits and that local pump prices of petroleum products are overpriced by P12 per liter.”

The research group estimates that as much as 47% to 54% of the pump price of petroleum products represents windfall profits of the oil firms.

“Since Republic Act 8479 or the Oil Deregulation Law was enacted a decade ago, the country has experienced unabated increases in oil prices, contrary to the law’s supposed intent to lower oil prices and break-up the local oil cartel. Since the start of oil deregulation in 1996, pump prices of unleaded gas have increased by 492 percent and prices of diesel have increased by 607 percent with oil firms acting in unison as a cartel. The latest incident of a three-peso increase in the price of diesel immediately followed by a P1.50 rollback upon the President’s appeal reveals the arbitrary and whimsical manner by which oil prices are being set in the country,” Ocampo said.

The militant solon also said that “despite moves to investigate and resolve the matter, the Executive branch, particularly the Departments of Energy and Justice, has miserably failed to provide government and the public a reasonable and well-informed explanation of the oil price movements in the country. The House should thus make its move to immediately address this issue.”

Aside from Rep. Ocampo, HR 677 has Bayan Muna Rep. Teddy Casiño, Anakpawis Rep. Rafael Mariano, and Gabriela Womens Party Reps. Luzviminda Ilagan and Liza Maza as co-authors. # Vincent Michael L. Borneo(NorDis)

Chevron posts record earnings

August 2, 2008

Reuters
First Posted 08:25:00 08/02/2008

NEW YORK — Chevron Corp. said on Friday record oil prices drove second-quarter earnings up 11 percent to its highest-ever profit, but weak margins from gasoline production led to a big loss at its refining operations.

US oil prices averaged slightly less than $125 a barrel in the quarter, nearly double prices from a year earlier. But gasoline prices only rose 25 percent during that same period, resulting in weak profit margins for the fuel.

Chevron, the second largest US oil company, said net income rose to $5.98 billion, or $2.90 a share, from $5.38 billion, or $2.52 a share, last year.

Analysts, on average, expected the company to earn around $3.02 a share, according to Reuters Estimates.

Exxon Mobil Corp., the top US oil company, posted the highest-ever quarterly profit by a US company on Thursday, bringing in nearly $11.7 billion, but still disappointed investors with weak production.

“Clearly three-percent lower [gasoline] demand is going to have an effect on downstream numbers at least until we see a real meaningful correction in the feedstock costs,” said Lewis Ropp, who helps manage around $60 billion at Barrow, Hanley, Mewhinney & Strauss.

Still, Ropp said Chevron’s profit was impressive due to the high oil and natural gas prices.

“The commodity price just overwhelms any weakness in any other areas,” he said.
Earnings from the company’s chemicals unit dropped more than 60 percent to $41 million.

Chevron shares rose 25 cents at $84.81 in morning trading on the New York Stock Exchange on Friday. At its Thursday closing price, the stock was down about 9.4 percent this year, underperforming the Chicago Board Options Exchange’s oil index, off about 7.8 percent over the same period.(PDI)

9 of 10 Metro Residents Want Oil VAT Scrapped

July 30, 2008

In spite of aggressive government efforts to justify the 12% value added tax (VAT) on oil, almost nine out of 10 Metro Manila residents still feel that the said tax must be scrapped.

In a metro-wide survey conducted by IBON Foundation on July 12-13, 87.33% of respondents agree with the proposals to scrap the VAT on petroleum products.

President Gloria Macapagal-Arroyo is expected to highlight the supposed benefits of the people from government’s growing collections from the VAT in her State of the Nation Address (SONA) on Monday.

Various groups have been calling for the cancellation of the VAT on oil in the face of escalating pump prices with several legislative proposals implementing the said measure currently pending in the House of Representatives and the Senate.

The Catholic Bishops Conference of the Philippines (CBCP) has also called for at least a review of the oil VAT. Estimates show that at current price levels, removing the controversial tax can reduce pump prices by more than P7 per liter.

IBON’s special survey was conducted across NCR and has a margin of error of plus of minus three percent.

Below is the tabulation of results of the respondents’ perception on the removal of the value-added tax on petroleum products.

Do you agree with the proposals to remove the VAT on petroleum products?
Yes 324 87.33
No 31 8.36
Don’t Know 16 4.31

371 100.00

IBON Foundation, Inc. is an independent development institution established in 1978 that provides research, education, publications, information work and advocacy support on socioeconomic issues.(PinoyPress)

Editorial Cartoon: SONA 2008, Bagsak!

July 26, 2008

Oily Report

13 gas stations use defective pumps

July 25, 2008

CAGAYAN DE ORO CITY — Thirteen gas stations in Cagayan de Oro City were found using defective pumps by a City Hall task force.

They have been shortchanging vehicle owners by as much as 43 centavos for every 10 liters of purchase.

Arroyo Watch: Sun.Star blog on President Arroyo

This brings the number to 19 gas stations already found by the City Treasurer’s Office Task Force Calibration to have defective gas pumps in the past month.

Last June 27, the task force found six gas stations, mostly located in Barangay Carmen, also with defective gas pumps.

Though they were sternly warned, the gas stations were allowed to operate again after the task force “fixed” the gas pumps.

“This kind of practice should not be tolerated because it’s not fair to the public,” said Councilor Ian Mark Nacaya, chair of the City Council Committee on Public Utilities.

According to Nacaya, the City Council passed a local ordinance last Monday that imposed stiffer penalties on erring gas station owners who have defective pumps.

Under the said ordinance, erring gas station owners will be penalized with a P5,000 fine and will have it’s defective pumps sealed to be taken out of business.

The 13 gas stations found to have defective pumps were:

* Jetti located at Calamansi drive in Barangay Carmen and registered under the name of Wilhelm Valencia;

* Jetti in Zone 6, Bulua Highway, under the name of Isen Ting;

* Sultan Shell Station along C.M. Recto Avenue-Licuan streets, registered under the Roy Tancinco;

* Ultra Shell 2 in Claro M. Recto Avenue and registered under Edna Puertas;

* Ultra shell located along Gusa Highway under Claudio Puertas;

* Petron Station and Service Center along Vamenta Boulevard, Barangay Carmen, registered under Maria Lourdes Jane Pepito;

* First Gusa Caltex in Barangay Gusa, registered under the name of Harley Yu;

* Shell Filling Station at the East Bound Terminal in San Pedro, Barangay Gusa, under the name of James Giam;

* Caltex Central Station located along A. Velez street, under Adlai Elizaga;

* Shell Station located along Yacapin-Osmeña streets, registered under the name of Alfonso Goking;

* Petron located in 8th Nazareth-Hayes street, under the name of Ariel Tan;

* Petron along C.M. Recto-Osmeña streets, registered under the name of Edsel Salvana; and

* Petron in Barangay Macasandig under Roger Tan

Lety Linda Caga, chief of business tax mapping at the City Treasurer’s Office, said these gas stations were found to have ” undelivered” 25 milliliter to 75 milliliter for every 10 liters of purchase.

Caga said they found that the owners were not calibrating their gas pumps every day.

Some of these gas stations, she said, are calibrating their pumps only once or twice a week.

According to her, the margin of error will rise with this kind of practice.

The task force is making weekly visits to all 43 gas stations operating in the city, according to Caga.

Once a defective pump is found, Caga said the task force will “fixed” the pump until it delivers the correct amount of fuel to vehicle owners.

“The calibration is done 2 to 3 times per nozzle (pump) so dili gyud namo undangan hangtod nga mainsakto ang measurement,” Caga said.

Caga said they also placed an “out of order” sign on every defective gas pump to warn vehicle owners.

But with only a few personnel in the task force, Caga conceded that the task of checking all of the gas stations is daunting. “We spend an entire day just inspecting one gas station,” she said. (Annabelle L. Ricalde/Sun.Star Cagayan de Oro/Sunnex)

Global Oil Giants, Local Big 3 Profiting from Speculation

July 21, 2008

World oil prices are bloated by speculation in oil markets, and local firms Petron, Shell, and Chevron Philippines which are domestic agents of the global oil monopolies are passing on this overpricing to consumers. This has resulted in record oil industry profits at the expense of hyper-inflation.

BY IBON FOUNDATION
Posted by Bulatlat
Vol. VIII, No. 24, July 20-26, 2008

World oil prices are bloated by speculation in oil markets, and local firms Petron, Shell, and Chevron Philippines which are domestic agents of the global oil monopolies are passing on this overpricing to consumers. This has resulted in record oil industry profits at the expense of hyper-inflation.

It is hard to quantify how much of the recent oil price increases are due to speculation but the steepness of increases in the past year in the absence of correspondingly large shifts in supply and demand fundamentals suggest that this is significant. A 2006 study by the U.S. Senate Permanent Subcommittee on Investigations for instance had already estimated that as much as 30 percent or more of the prevailing crude price at the time was due to speculation-driven purchases.

Applying this to how the cost of crude oil accounts for around 75 percent of the local pump price of fuel (based on the Department of Energy estimate of crude/product costs in diesel and gasoline prices of the oil industry and importers) implies that over 20 percent of local pump prices are due to speculation-driven overpricing.

The monopoly oil transnationals already rake in billions of super-profits from inflating the price of their oil.

This monopoly pricing has been further bloated since last year by increasing speculation in world oil market. The deepening financial and economic crisis especially since mid-2007 has seen big financial investors, especially oil firms recycling their accumulating profits, shifting money into commodity markets particularly in oil, food and gold.

It is likely that the current bloating of oil prices due to speculation today will be even more than estimated by the 2006 U.S. Senate report inasmuch as speculative investments in energy commodities today are double the US$100-150 billion levels around the time the report was made. This has already been acknowledged by, among others, even the Saudi Arabian and German governments, U.S. government officials and the International Monetary Fund (IMF).

Thus, any effort to address the global problem of high oil prices has to squarely address the monopoly domination and price manipulation of the big oil corporations. The energy industry is too critical and strategic to be left in the hand of private profit-maximizing interests. The ease with which local oil firms can pass on this manipulated increase in global oil prices on top of built-in overpricing underscores the need for genuine regulation of the domestic oil industry to, at the very least, rein in such excessive profiteering at the people’s expense. Posted by Bulatlat

2 oil firms earned P70B, says lawmaker

July 21, 2008

MANILA, Philippines—Oil companies in the country have been raking in huge profits amid soaring fuel prices, according to Cebu Rep. Eduardo Gullas.

But Petron Corp. said its earnings were small compared with other industries, while Pilipinas Shell Petroleum Corp. said it was just making “reasonable financial returns.”

Gullas Sunday called on the Department of Energy to use its powers under the Downstream Oil Industry Deregulation Law to prevent oil companies from possible pricing abuses.

Pilipinas Shell and Petron have accumulated a combined net profit of almost P70 billion since the law was passed 10 years ago, the lawmaker said, citing regulatory filings of the two companies.

Shell, which controls 31 percent of the domestic market, earned P33.59 billion from 1998 up to the first quarter of this year, while Petron netted P35.18 billion during the same period, he said.

Gullas said similar figures pertaining to Chevron Philippines Inc. (formerly Caltex) were not readily available. He said the last report from the company showed it had a net profit of P2.75 billion in 2006.

Aside from the possibility of excessive profits, Sen. Joker Arroyo said early this year that big oil companies could also be the country’s biggest smugglers because they were keeping their books away from closer scrutiny by authorities.

Enormous pricing power

“There is no question that as a result of soaring world oil prices, industry players are enjoying enormous pricing power that has enabled them to pump up their profit,” Gullas said in a statement.

“Consumers are now extremely vulnerable to potential pricing abuses.”

Since the beginning of 2008, he said oil companies had jacked up the price of diesel and kerosene 20 times for a total of P24 to P22.50 a liter. Gasoline prices had been increased 19 times for a total of P19 a liter.

Petron and Pilipinas Shell said they may be posting billions in profits each year, but these were but small percentages of the investments that they were injecting into their businesses each year.

In a statement issued to the Philippine Daily Inquirer on Sunday, Petron said its net income was actually equivalent to just around 2-3 centavos for every peso in sales.

“This is significantly lower than other industries. Additionally, we have been investing heavily to improve the quality of our fuels and to ensure the energy security of the country,” Petron said.

“For instance, in 2005, we made a $100-million investment for cleaner fuels. This year, we opened our $300-million facility that will enable us to produce more white products (such as) gasoline, diesel and liquefied petroleum gas for domestic consumption. This is outside the billions of pesos in investments (for) service stations, additional distillation capacity and others that we have made since the deregulation (of the industry),” it said.

Petron in the first quarter registered a net income of P658 million, 31 percent lower than the P953 million the company posted in the same period last year.

Capital intensive

Roberto Kanapi, Shell general manager for external affairs, said it was not enough to just look at an oil firm’s bottom line, considering the capital-intensive nature of the downstream oil industry.

“Profits should be measured and taken in context of returns. Two (Department of Energy)-commissioned audits of Shell’s performance during deregulation indicated reasonable financial returns,” Kanapi said in a text message sent to the Inquirer newspaper (parent company of INQUIRER.net).

The latest DOE-commissioned study, jointly conducted by Sycip, Gorres, Velayo & Co. and University of Asia and the Pacific, showed that Petron in 2007 posted a return on equity (ROE) of 2.44 percent, including exports and 0.4 percent net of exports.

Shell, on the other hand, posted a significantly higher ROE of 12.21 percent.

ROE shows how efficiently a company generates profits from every peso invested or how well a company uses its investments to grow its earnings.

Check potential abuse

With the oil deregulation law proving to be a “boon” to both Shell and Petron, Gullas said the energy department should use its powers under the same law to keep oil companies from manipulating prices.

“(It) has adequate powers under the law to rigorously watch pump prices and check potential abuses,” he said. “The law did not render (it) helpless with regard to any excessive and unreasonable increases in the prices of petroleum products.”

Under Republic Act No. 8479, he said the department could “act upon any unreasonable increases in the prices of petroleum products.”

Gullas said the law empowered the energy secretary to scrutinize oil players and make public the department’s findings.

Joint task force

Gullas said a joint task force involving the energy and justice departments could “gather information under oath and investigate on its own any matter about the industry.”

“It may also file certain complaints before the proper court, if necessary,” he said.

Gullas said Malacañang or Congress could also instruct the Energy Department to “investigate and report the facts relating to any alleged violation of RA 8479 by any person or corporation.”

The Pagkakaisa ng mga Samahan ng Tsuper at Opereytor Nationwide (Piston) claims that there is a P12-per-liter overpricing in the domestic prices of petroleum products, as supposedly shown by a study of Ibon Foundation. Christian V. Esguerra, Abigail L. Ho and Leila B. Salaverria

(PDI)

Welga ng Bayan looms

July 21, 2008

By JASON B. NEOLA

MILITANT transport organizations in the Bicol region are poised to stage a well-organized inter-province exploratory talk leading to the holding of a nationwide ‘Welga ng Bayan’ once pump prices of fuel and other petroleum products hit P70 a liter.

Pio Samonte, president of the 700-strong Naga City Jeepney Transport Federation, disclosed that transport leaders in the region are taking a close watch on the unabated skyrocketing of fuel prices.

Petroleum products have jacked up its prices 18 times since January, this year, which is currently pegged at P55.82 for diesel; P57.85, kerosene and P60.56 for gasoline a liter, inclusive of EVAT.

Samonte said along with other big transport groups in Camarines Sur and Camarines Norte, the Albay-based Pinag-isang Samahang Transportasyong Organisasyon Nationwide (PISTON), Legazpi-based Concerned Operators and Drivers Regionwide (CONDOR) and the Sorsogon-based City Integrated Transport Organization led by Fernando Bobis are now engaging in active networking with small and big transport groups for an imminent Welga ng Bayan.

The Welga ng Bayan will press for the immediate abolition of oil deregulation law and the scrapping of 12-percent expanded value-added tax on pump prices of gasoline and other petroleum products.

As of press time, the transport sector in the city has not yet made any pronouncement on the specific date of the Welga ng Bayan.

P90-B EVAT

Value-added tax is a sales tax levied on the sale of goods and services and on the imports of goods into the country. It is an indirect tax passes on to the buyer, from which the government, according to reports by the IBON Foundation, was able to accumulate P80-billion to P90-billion pesos in the past few months

Shell petroleum dealer Dr. Domingo Yu lamented the connivance between the oil firms and the administration of President Gloria Macapagal-Arroyo that makes the life of the Filipino people even more miserable with the EVAT.

He also assailed Arroyo and Energy Secretary Angelo Reyes for their weak leadership in resolving the matter.

Yu said last month he was billed more than P550,179.84 for petroleum products that costs only P491, 230.00 because of the exorbitant sales tax.

Malacanang, however, maintained that suspension of the 12-percent expanded value-added tax on oil products would mean reduced funding for the government’s pro-poor programs.

But transport leaders belonging to the Naga City Jeepney Transport Federation said scrapping the E-VAT on oil products would increase the people’s purchasing power and at the same time make the country’s economy more dynamic.

“While the Big Three oil firms in the Philippines claim losses due to under-recoveries, their mother companies abroad continue to report record billions in profits. Royal Dutch Shell, the mother company of Pilipinas Shell, posted net income of $27.6 billion in 2007, making it the second most profitable company in the world next to oil giant Exxon Mobil. During the same year, Pilipinas Shell recorded profits of P4.12 billion,” a statement from the Ibon Foundation said

It further said that Chevron, mother unit of Chevron Philippines (formerly Caltex), reported net income of $18.7 billion in 2007, 9% higher than in 2006 and enough to rank it the eighth most profitable company in the world. Its local unit in the country reported P2.75 billion in profits in 2007

Petron, which is co-owned by the Philippine government and Saudi Aramco, recorded profits of P5.94 billion in 2007. Its net income has been progressively increasing in the last three years, posting P5.76 billion in 2006 and P3.42 billion in 2005. Aramco, unlike Shell and Chevron, is an unlisted company that is not obliged to report its financial books, but its profits in 2007 are likely to have reached $15 billion.

Hesitant protesters

Although admitting that certain kinks have made the transport industry in Bicol less active in joining nationwide Welga ng Bayan, the mood would be different if pump prices of fuel hit P70 a liter, a source said.

Transport leaders were apprehensive that the Land Transportation Franchising and Regulatory Board (LTFRB) may resort to getting back on transport leaders who would be involved in the nationwide protest. “LTFRB can disapprove our application for a franchise or have our franchises cancelled,” the source who is a PUV operator said.

The same source cited several incidents in 2007 when some of the leaders, after they staged a transport strike, were warned by the LTFRB about corresponding consequences for their active participation in similar mass actions. He did not elaborate.

Deregulation failed

IBON Facts and Figures said oil prices have increased by an average of 50% over the past year, highlighting the failure of oil deregulation in bringing down petroleum prices.

It said between June 2007 and June 2008, average pump prices of unleaded gasoline and diesel have increased by 47% and 52%, respectively

Further, since the start of deregulation in 1996, pump prices of unleaded gas have increased by 492 percent. Meanwhile, prices of diesel have increased by 607 percent

Oil deregulation was supposed to ensure affordable and accessible petroleum products by breaking up the local oil cartel, allowing “market forces” to determine the real price of oil. Instead, it only gave Shell, Petron and Chevron (formerly Caltex), more room for speculation and dictate prices and price hikes.

IBON estimates that as much as 47% to 54% of the pump price of petroleum products represent windfall profits for the oil firms.

Yu said the effective way to break up the monopoly of oil firms over the local downstream oil sector and ensure affordable and accessible oil products is to revoke the oil deregulation law and give the government regulatory authority over the oil industry.

Government’s blunder

Transport leader Rafael Duque of 1,240-strong Pinag-isang Samahang Tsuper ng Traysikel at Operators sa Naga (PISTTON) shared his sentiments with Yu, saying government’s policies on oil are not in conformity with the current economic situation that severely affect the livelihood of PUV drivers and operators.

Jeepney operator Alberto Darilay deplored what he called destructive competition among jeepney operators and drivers over the diminishing number passengers due to fuel’s periodic price hike that spawn high prices of commodities, including fares.

Trying to resolve the problem, the Naga City-based transport groups have requested the city government to relax some traffic regulations so that they could maximize loading of passengers in areas where they are otherwise not allowed to pick up passengers.

Other initiatives that Naga transport groups are working on is the materialization of the P2 government subsidy or discount on fuel for PUVs, the implementation of the Volume Reduction Scheme or the reduction in the number of PUVs on the road and lessening the amount of boundary fee paid to PUV operators by as much as 30 to 40 percent.

Not fuel alone

PUV operators Val Magayanes and Evaristo Palomares bewailed how prices of jeepney spare parts went up consistently with the rising of fuel prices.

They said prices of motor spare parts increased by more than 50 percent. They said tie-rod end alone that usually sold at P250.00 now costs P650.00; Goodyear tire that costs P2,400 – now, P4,000; release bearing, usually sold at P420, now P680; and overhauling gasket worth P1,400, now costs P2,200.

Duque likewise assailed the government for its continued failure to check the soaring prices of motorcycle spare parts now hitting more than 50 percent compared to the prices three months ago.(BiclMail)

VAT sa krudo, nasa P6.71 na kada litro; P88.62 sa LPG

July 17, 2008

Soliman A. Santos

Umaabot na sa P6.71 ang VAT (value added tax) sa krudo habang P88.62 sa bawat 11-kilogram na tangke ng LPG (liquefied petroleum gas) matapos ang 18 beses na pagtaas ng presyo ng langis ngayong taon, ayon sa Kontra-KulimVAT, isang grupong nananawagan sa pagtanggal ng VAT sa langis at kuryente.

Noong Enero, nasa P4.61 kada litro ang buwis sa langis habang P72.35 kada 11-kg tangke ng LPG. Nangangahulugan ito na sa loob lamang ng kulang na pitong buwan, P2.10 kada litro ng krudo at P16.27 kada tangke ng LPG ang nakolekta ng gobyerno sa mga nabanggit na produkto.

Idinagdag pa ng Kontra-KulimVAT na noong Enero, tinatayang P81.27 milyon araw-araw ang nakokolekta ng gobyerno sa VAT sa krudo at P18.62 kada araw sa LPG. Dahil sa mga pagtaas ng presyo, inaasahang makakakolekta ang gobyerno ng P118.29-M mula sa VAT sa krudo at P22.77-M  sa LPG.

“Gayunman, ang malaking pagtaas ng buwis ng gobyerno ay nangangahulugan ng mas malaking pahirap sa mga ordinaryong mga mamamayan,” ayon kay Arnold Padilla, tagapagsalita ng Kontra-KulimVAT.

Sinabi ni Padilla na noong Enero, gumagastos ng P138.80 sa arawang biyahe ang isang drayber ng dyip para sa VAT sa krudo. Sa ngayon, tinatayang P201.30, o dagdag na P63 ang kanilang kailangang gastusin. Tinatayang nasa 426,000 ang tsuper ng dyip sa buong bansa.

Samantala, halos 8.6 million kabahayan sa buong bansa naman ang gagastos ng P66.46 kada buwan para bayaran ang VAT sa LPG, kumpara sa P54.26 noong Enero.

“Hindi na mapapangatwiranan ng administrasyong Arroyo ang VAT sa langis dahil sa tuluy-tuloy na pagtaas ng presyo. Ang desperadong hakbang nito para kontrahin ang panawagang alisin ang buwis na ito sa pamamagitan ng rolbak ng presyo at mga subsidyo ay hindi magpapatahimik sa nahihirapang taumbayan,” sabi ni Padilla.(PinoyWeekly)

Inis sa buwis sa langis

July 17, 2008

Konteksto

Danilo Araña Arao

MAGSIMULA tayo sa isang paglilinaw: Ang pag-aalis ng 12 porsiyentong VAT (value-added tax) sa mga produktong petrolyo ay hindi nangangahulugan ng awtomatikong pagbaba sa presyo ng mga ito.

Dahil sa deregulasyon sa downstream oil industry, may kalayaan ang mga kompanya ng langis na magtakda ng anumang presyong nais nila.

Nakasaad man sa Republic Act No. 8479 (Downstream Oil Industry Deregulation Act of 1998) na ilegal ang predatory pricing (Sek. 11), ang esensiya ng probisyong ito ay protektahan ang mga kompanya ng langis sa gawain ng malalaking kakompetensiyang magbenta ng mga produktong petrolyo nang mas mababa pa sa average variable cost. Ibig sabihin, walang nagbabawal sa isang kompanya ng langis na taasan ang presyo ng mga produkto nito kumpara sa mga kakompetensiya.

Hindi ba’t sa simpleng pagbabasa pa lang ng Sek. 11 ng RA 8749 ay maiinis ka na? Kung isasakonteksto mo pa ito sa pagtatanggal ng buffer fund at iba pang mekanismo para magbigay ng subsidyo (kahit na lang sa tinatawag na socially sensitive products tulad ng diesel, kerosene at LPG), lumalabas na walang pakialam ang gobyerno kung itaas man nang sobra-sobra ang mga produktong petrolyo.

Pero sa totoo lang, may pakialam ang gobyerno sa usapin ng kita: Nasa bentahe kasi ng gobyerno ang patuloy na pagtaas ng presyo ng mga produktong petrolyo dahil sa mas mataas ang buwis na makokolekta mula sa mga ito.

Isipin mo na lang. Ipinatupad ang Republic Act No. 9337 (Reformed VAT Law) na sumaklaw sa mga produktong petrolyo at nagtaas sa VAT rate mula 10 papuntang 12 porsiyento noong Nobyembre 1, 2005. Noong panahong iyon, ang presyo ng gasolina ay P36.05 at ang diesel ay P32.95.

Sa ngayon, ang presyo ng gasolina at diesel ay mahigit nang P60 at P50. Sa kabila ng pisong rollback ngayong linggo, inaasahan pa rin ang tuluy-tuloy na pagtaas sa presyo ng mga produktong petrolyo sa mga susunod na buwan. Sa aking opinyon, ang ginawang rollback ay para lang mapawi, kahit pansamantala, ang galit ng mamamayan. Pansinin ding ang desisyon ng mga kompanya ng langis hinggil sa rollback ay nangyari isang araw bago ang pambansang walkout ng kabataan na kung saan isa sa mga isyu ay ang krisis sa langis.

Sa usapin ng VAT, hindi mo na kailangang maging eksperto sa matematika para malamang malaki ang kaibahan sa 12 porsiyentong VAT na kinokolekta noon at ngayon.

Mula Enero hanggang Setyembre 2006, makikita sa datos ng DOF (Department of Finance) na nakakolekta ang pamahalaan ng P15.1 bilyon mula sa VAT sa mga produktong petrolyo. Para sa buong taon ng 2007, ang aktuwal na nakolektang VAT mula sa mga produktong petrolyo ay P45.6 bilyon.

Sa konteksto ng nagtaasang presyo ng mga produktong petrolyo, hindi na nakakagulat na ang inaasahang makolektang VAT sa taong ito ay P73.4 bilyon na nangangahulugan ng 61 porsiyentong pagtaas kumpara sa nakaraang taon. At kung gusto mong ikumpara ito sa nakolekta noong unang siyam na buwan ng 2006, ang pagtaas ay umaabot sa 386 porsiyento.

Ang panawagan para tanggalin ang VAT sa mga produktong petrolyo ay may layuning tanggalin ang pagsasamantala ng pamahalaan sa paghihirap ng mamamayan. Ang anumang rollback na magreresulta mula sa pagtatanggal ng VAT (kung mayroon man) ay nasa desisyon pa rin ng mga kompanya ng langis. Ang pagkokontrol sa presyo ng mga produktong petrolyo ay susi sa pagkakaroon ng makatarungang pagtatakda ng presyo lalo na sa diesel, kerosene at LPG na binibili ng mahihirap.

Pero imposible ang pagkokontrol sa presyo ng mga produktong petrolyo sa ilalim ng deregulasyon. Kaya huwag kang magulat kung may dalawang susing panawagan sa panahong ito – ang pagbabasura sa RA 8479 at ang pagtatanggal ng VAT sa mga produktong petrolyo.

Paano nga naman magiging makabuluhan ang pagbabago kung pababayaan natin ang isang mapanupil na rehimen, sa industriya man ng langis o sa buong lipunan?

Para makipag-ugnayan sa awtor, pumunta sa http://www.dannyarao.com.

Barangay RP on Oil

July 15, 2008

Bush lifts offshore oil drilling ban

July 15, 2008

Agence France-Presse
First Posted 05:37:00 07/15/2008

WASHINGTON — US President George W. Bush on Monday lifted a White House ban on offshore oil drilling and urged lawmakers to follow suit amid an election-year fight over painfully high gasoline prices.

“The American people are watching the numbers climb higher and higher at the pump, and they’re waiting to see what the Congress will do” about legislative prohibitions, he said in a brief statement in the White House Rose Garden.

But Democrats who control both houses of the US Congress rejected Bush’s mostly symbolic appeal, effectively dooming a proposal that appeared to enjoy broad US public support some four months before the November elections.

“The Bush plan is a hoax. It will neither reduce gas prices nor increase energy independence,” said House Speaker Nancy Pelosi, who urged Bush to bring some of the Strategic Petroleum Reserve stockpile to market.

“We cannot drill our way out of this problem,” said Senate Majority Leader Harry Reid, who charged that big oil companies are “not using more than half of the public lands they already have leased for drilling.”

The existing ban may be renewed or modified when it expires September 30, and the White House wants legislation that would give states a say in whether to allow offshore drilling, how much and where, and how to manage revenues.

Bush’s announcement came two weeks before lawmakers leave for their month-long August recess, at a time when four out of five Americans tell public opinion surveys that sky-high gasoline prices cause considerable economic pain.

“As the Democratically controlled Congress has sat idle, gas prices have continued to increase. Failure to act is unacceptable. It’s unacceptable to me, and it’s unacceptable to the American people,” he said.

Democrats counter that a plan that, by some estimates, would not yield a drop of oil for as much as a decade will not bring down gasoline prices now and that Bush has done too little to seek alternative energy sources.

The announcement came amid a bitter political battle over soaring gasoline prices at a time when US public opinion polls show most voters worry most about the economy — even more than about the wars in Iraq or Afghanistan.

Presumptive Republican presidential champion John McCain has pushed for ending the offshore drilling ban, drawing fire from environmental groups and his all-but-certain Democratic rival, Barack Obama.

A late-June poll by CNN found that 73 percent of the US public at least mildly supports increased offshore drilling, while 27 percent at least mildly opposes it. The error margin was plus or minus three percentage points.

Under the 1981 federal moratorium, states are prohibited from allowing offshore oil and gas drilling and exploration, protecting virtually the entire Atlantic and Pacific coastlines and sections of the Gulf of Mexico.

Critics of lifting the drilling moratorium say it would jeopardize the environment and that production would take years to get up and running, and thus is not a realistic answer to the current supply crunch.

California Governor Arnold Schwarzenegger, who had already said he wants no drilling off his state’s lengthy portion of the US west coast, renewed his opposition and urged the country to move away from its dependence on oil.

“I know people are frustrated with the soaring price of gas, and I welcome the national debate on solutions to lower our energy costs, but in California we know offshore drilling is not the answer,” he said.

The White House hopes for a two-step process, first lifting the congressional ban and then legislating a precise distance from shore where drilling would be possible, a formula for revenue sharing, and measures to make sure states have a say in how the drilling would proceed.

(PDI)

Gloria rejects calls to scrap VAT on oil

July 15, 2008

Says painful measures cushion impact of price surge


BY JOCELYN MONTEMAYOR

PRESIDENT Arroyo yesterday virtually rejected calls to scrap or lower the 12 percent value-added tax on oil as she said her administration is sticking by its fiscal reform policies.

These policies, she said, have been acknowledged by the international financial community and have helped cushion the impact of rising prices of fuel and rice.

She said while her fiscal programs include unpopular and painful measures like the VAT, these are helping generate revenues for infrastructure and social reform programs and preparing the country to face the global fuel and food crisis.

Arroyo has been saying excess revenues from VAT are funding the P500 one-time subsidy for “lifeline” electricity consumers and other pro-poor programs.

“Because we have been prepared for it, we have been able to shield our nation from the worst effects of food and fuel crisis worldwide. Had we acted differently, or not acted at all, all would be lost today,” she said.

“The world crisis did not catch us unprepared or without reserves. We took hard decisions several years ago – hard on our people, unpopular with big business but good for the country as events have shown beyond any doubt. These hard decisions were intended to raise new revenues, large amounts of new revenues,” she added.

With the fiscal reforms, Arroyo also said, the government can address day to day problems brought about by world food and fuel crisis, and at the same time continue to invest in the country’s future.

The President said the international finance community agrees with that the Philippines is making progress, as shown by the stable and positive outlook given by credit rating firms like Moody’s, Standard and Poor and Fitch.

“We are happy that the World Competitive Yearbook, the latest edition, shows a remarkable improvement of five notches on the rating of the Philippines,” she also said.

In the WCY of Switzerland’s Institute of Management Development, the Philippines occupies the 40th spot out of 55 nations surveyed, an improvement from last year’s 45th place.

The President acknowledged Filipinos living and working overseas, who she said helped fuel economic growth.

“Your remittances make up the bulk of the record-setting $16billion that we received in remittances in 2007,” she said.

Because of the remittances, the gross national product has remained at 7 percent even if the gross domestic product stood at 5.2 percent, she said.

Arroyo said it is also urgent that the Philippines now take greater control of its destiny by becoming more self reliant and self sufficient in light of the rapid rise in food and fuel prices in the world.

“When it comes to food and fuel, definitely we cannot run the risk of no one selling us both unless we pay impossible prices,” she said.

(Malaya)

Despite Claims Of Under-Recoveries: Big Three Rake In Billions In Global Oil Profits

July 14, 2008

While the Big Three oil firms in the Philippines claim losses due to under-recoveries, their mother companies abroad continue to report record billions in profits. Royal Dutch Shell, the mother company of Pilipinas Shell, posted net income of $27.6 billion in 2007, making it the second most profitable company in the world next to oil giant Exxon Mobil. During the same year, Pilipinas Shell recorded profits of P4.12 billion.

On the other hand, Chevron, mother unit of Chevron Philippines (formerly Caltex), reported net income of $18.7 billion in 2007, 9% higher than in 2006 and enough to rank it the eighth most profitable company in the world. Its local unit in the country reported P2.75 billion in profits in 2007.

Petron, which is co-owned by government and by Saudi Aramco, recorded profits of P5.94 billion in 2007. Its net income has been progressively increasing in the last three years, posting P5.76 billion in 2006 and P3.42 billion in 2005. Aramco, unlike Shell and Chevron, is an unlisted company that is not obliged to report its financials, but its profits in 2007 are likely about $15 billion.

Domestic profits do not even fully reflect the oil monopolies’ overall profits because the transnational oil firms’ local subsidiaries are merely booking their profits abroad through the deceitful practice of transfer pricing to deflect criticisms of their massive windfall profits.

At any rate, the Big Three oil firms are clearly still making billions of pesos in profits, and thus any claim of so-called under-recoveries does not mean that they are taking any losses.

The monopoly oil transnational firms abroad normally already inflate the price of their oil to get their super-profits. This overpricing has even been extremely bloated since last year by increasing speculation in world oil markets. “Transfer pricing” however refers to oil firms’ practice of further padding the price of oil they sell to their subsidiaries to shift recording of profits from subsidiaries to mother corporations. The net result of this transfer pricing is that the seemingly lower profits of the subsidiaries, because of higher costs of oil imports, are actually off-set by higher profits of the mother companies.

Oil transnational firms are able to engage in transfer pricing because of their vast control of the different stages of oil production and distribution. In the Philippines, around 90% of oil in the market passes through the Big Three. They use lower reported domestic profits to disguise the massive global profits they are making and to deflate public anger against them.

Those mega-profits earned by exploiting unchecked monopoly control and covered up through unscrupulous practices, even as ordinary Filipinos reel from the harsh impact of escalating fuel prices, highlight the urgent need for government regulation and control over the local oil sector to help ensure transparency in pricing. (end)

Editorial Cartoon: The Drowning

July 12, 2008

Dying

It was Oil, All Along

July 12, 2008

“The war in Iraq has absolutely nothing to do with oil,” so we were told. It actually is about oil, all along.

BY BILL MOYERS AND MICHAEL WINSHIP
Truthout.org
ALTERNATIVE READER
Posted by Bulatlat
Vol. VIII, No. 22, July 6-12, 2008

Oh no, they told us, Iraq isn’t a war about oil. That’s cynical and simplistic, they said. It’s about terror and al-Qaeda and toppling a dictator and spreading democracy and protecting ourselves from weapons of mass destruction. But one by one, these concocted rationales went up in smoke, fire and ashes. And now the bottom line turns out to be…the bottom line. It is about oil.

Alan Greenspan said so last fall. The former chairperson of the Federal Reserve, safely out of office, confessed in his memoir, “Everyone knows: the Iraq war is largely about oil.” He elaborated in an interview with The Washington Post’s Bob Woodward, “If Saddam Hussein had been head of Iraq and there was no oil under those sands, our response to him would not have been as strong as it was in the first Gulf War.”

Remember also that soon after the invasion, Donald Rumsfeld’s deputy, Paul Wolfowitz, told the press that war was our only strategic choice. “We had virtually no economic options with Iraq,” he explained, “because the country floats on a sea of oil.”

Shades of Daniel Plainview, the monstrous petroleum tycoon in the movie “There Will Be Blood.” Half-mad, he exclaims, “There’s a whole ocean of oil under our feet!” then adds, “No one can get at it except for me!”

No wonder American troops only guarded the Ministries of Oil and the Interior in Baghdad, even as looters pillaged museums of their priceless antiquities. They were making sure no one could get at the oil except … guess who?

Here’s a recent headline in The New York Times: “Deals With Iraq Are Set to Bring Oil Giants Back.” Read on: “Four western companies are in the final stages of negotiations this month on contracts that will return them to Iraq, 36 years after losing their oil concession to nationalization as Saddam Hussein rose to power.”

There you have it. After a long exile, Exxon Mobil, Shell, Total and British Petroleum (BP) are back in Iraq. And on the wings of no-bid contracts – that’s right, sweetheart deals like those given Halliburton, KBR and Blackwater. The kind of deals you get only if you have friends in high places. And these war profiteers have friends in very high places.

Let’s go back a few years to the 1990s, when private citizen Dick Cheney was running Halliburton, the big energy supplier. That’s when he told the oil industry that, “By 2010 we will need the order of an additional 50 million barrels a day. So where is the oil going to come from? While many regions of the world offer great oil opportunities, the Middle East, with two-thirds of the world’s oil and the lowest cost, is still where the prize ultimately lies.”

Fast forward to Cheney’s first heady days in the White House. The oil industry and other energy conglomerates were handed backdoor keys to the White House, and their CEOs and lobbyists were trooping in and out for meetings with their old pal, now Vice President Cheney. The meetings were secret, conducted under tight security, but as we reported five years ago, among the documents that turned up from some of those meetings were maps of oil fields in Iraq – and a list of companies who wanted access to them. The conservative group Judicial Watch and the Sierra Club filed suit to try to find out who attended the meetings and what was discussed, but the White House fought all the way to the Supreme Court to keep the press and public from learning the whole truth.

Think about it. These secret meetings took place six months before 9/11, two years before Bush and Cheney invaded Iraq. We still don’t know what they were about. What we know is that this is the oil industry that’s enjoying swollen profits these days. It would be laughable if it weren’t so painful to remember that their erstwhile cheerleader for invading Iraq – the press mogul Rupert Murdoch – once said that a successful war there would bring us $20-a-barrel oil. The last time we looked, it was more than $140 a barrel. Where are you, Rupert, when the facts need checking and the predictions are revisited?

At a Congressional hearing this week, James Hansen, the NASA climate scientist who exactly 20 years ago alerted Congress and the world to the dangers of global warming, compared the chief executives of Big Oil to the tobacco moguls who denied that nicotine is addictive or that there’s a link between smoking and cancer. Hansen, whom the administration has tried again and again to silence, said these barons of black gold should be tried for committing crimes against humanity and nature in opposing efforts to deal with global warming.

Perhaps those sweetheart deals in Iraq should be added to his proposed indictments. They have been purchased at a very high price. Four thousand American soldiers dead, tens of thousands permanently wounded, hundreds of thousands of dead and crippled Iraqis plus five million displaced, and a cost that will mount into trillions of dollars. The political analyst Kevin Phillips says America has become little more than an “energy protection force,” doing anything to gain access to expensive fuel without regard to the lives of others or the earth itself. One thinks again of Daniel Plainview in “There Will Be Blood.” His lust for oil came at the price of his son and his soul. Posted by Bulatlat

Bill Moyers is managing editor and Michael Winship is senior writer of the weekly public affairs program Bill Moyers Journal, which airs Friday nights on PBS. Check local airtimes or comment at The Moyers Blog at www.pbs.org/moyers.

Editor’s Note: This Bill Moyers comment on America’s oil policy was presented on Friday 27 June 2008 on Bill Moyers Journal. Other portions of the program can be viewed here TO/vh

Editorial Cartoon: Torture

July 9, 2008

Another human rights violation.

Moro group hits Balikatan

July 6, 2008

GENERAL SANTOS CITY — The United States has been allegedly probing resource-rich Mindanao in the guise of the Balikatan military exercises, a proof of this is the planned exploration of Exxon Mobile Corp in Sulu Sea, a progressive Moro group has asserted.

“The affirmation of Energy Secretary Angelo Reyes that “Exxon Mobile will not go into any area unless the reserves are large scale or there is a large amount of quality oil” is a proof that the United States of America has long been probing the vastness and productiveness of the Philippines soil in the guise of Balikatan exercises and humanitarian missions,” Bai Ali Indayla, Suara Bangsamoro secretary general, said.

Arroyo Watch: Sun.Star blog on President Arroyo

But Philippine and American military officers said that the Balikatan (shoulder-to-shoulder) exercises are simply meant to enhance each other’s tactical or operational capabilities.

Earlier, Reyes announced that Exxon Mobile, a giant in the oil industry based in the United States, is set to explore the resource-rich Sulu Sea for crude oil deposits this year.

Sulu Sea is home to Tubbataha Reef National Marine Park, considered one of the world’s best heritage sites. Sulu Sea connects the South China Sea and Celebes Sea, which serves as route for tuna and other varieties of fishes going in and out the Pacific Ocean.

Indayla assailed the imminent effects of the looming exploration to the people of Sulu, whom she said “have had enough of never-ending wars, kidnaps, hamlets and killings since the American occupation.”

She said her group is strongly opposing the exploration of Exxon Mobile in Sulu Sea “because it would not only affect and devastate the environment and people’s livelihood but also because it is a testament to the long-list of documents that Filipino people vend their natural resources to foreign countries.”

Exxon Mobile will reportedly shell out $110 million for its exploration activities alone.

Suara Bangsamoro raised fears that Exxon Mobile’s exploration in the Sulu Sea will mark the onset of large-scale explorations in other oil-rich areas in the country.

Indayla chided the government’s concession to foreign oil companies to explore the Philippines, noting the country is continuously importing oil and experiencing oil price increases.

Reyes has said that Exxon Mobile will be farmed into service contract 56 in the Sulu Sea, which is currently being held by Malaysian exploration company Mitra Energy Ltd.

He said Exxon Mobile will be the 50 percent owner of the contract, and will be allowed to operate this project in Sulu.

Indayla lamented that the country’s natural resources are benefitting foreigners, especially those from the United States, rather than Filipinos.

“We are putting our hands to a tiger’s mouth by allowing them to utilize and exploit our own reserves,” she said.

Indayla asked the government to safeguard the welfare of its people first before the interest of foreign corporations. (BSS)

==============================

My Take:

US is so addicted to oil it will invade any nation just to have a grasp of that sticky black gold.

Diskusyon sa deregulasyon

July 5, 2008

Danilo Araña Arao

Simple lang naman ang prinsipyo ng deregulasyon na siya ngayong kalakaran sa downstream oil industry.

Para umunlad ang ekonomiya, kailangang tanggalin ang lahat ng balakid sa malayang kompetisyon. Hindi dapat direktang makipagkompetensiya ang pamahalaan sa mga lokal at dayuhang mamumuhunan, kaya kailangang ibenta sa sinumang interesado (dayuhan man o hindi) ang anumang GOCCs (government-owned and controlled corporations) tulad ng Petron na nakikipagsabayan sa iba pang kompanya tulad ng Shell at Chevron. At kung noon ay limitado lang ang puwedeng pumasok sa isang pang-ekonomiyang sektor, sa ilalim ng deregulasyon ay maaari nang mamuhunan ang kahit sinong interesado. Ayon sa datos ng DOE (Department of Energy), umabot na sa 601 ang mga bagong kompanyang nakikipagkompetensiya sa tinaguriang Big Three – Petron, Shell at Chevron (dating Caltex).

Sa pagtatanggal ng mga regulasyong pumipigil sa malayang kompetisyon, inaasahan ang pagbibigay ng ”kapangyarihan” sa mga konsumer. Sa partikular, ito ay ang kapangyarihang magkaroon ng mas maraming pagpipilian. Kung noon ay tatlong kompanya lang ang pinagkukunan ng mga produktong petrolyo, ngayon ay napakarami na.

Para sa mga naniniwala sa patakarang globalisasyon (na kung saan ang deregulasyon ay isa sa tatlong prinsipyo, kabilang ang liberalisasyon at pribatisasyon), ang sukatan ng kapangyarihan ng konsumer ay ang dami ng kanyang pagpipilian.

At sa pagdami ng mga kompanya, inaasahan ang malayang kompetisyong magbubunga ng mababang presyo at magandang serbisyo para sa mga konsumer. Ang tendensiya raw kasi ng isang kapitalista ay makaengganyo ng mas maraming mamimili sa anumang paraan, tulad ng epektibong patalastas, substansiyal na diskwento at, siyempre pa, mas mababang presyo.

Ganito ba ang nangyari sa paglipas ng panahon? Malamang na alam mo na ang sagot, pero balikan pa rin natin ang mga datos.

Tandaan nating nagsimula ang deregulasyon sa downstream oil industry noong Abril 1996. Ang presyo noon ng gasolina at diesel ay P9.50 at P7.03.

Alam mo na sigurong dahil sa sunud-sunod na pagtaas ng presyo ng mga produktong petrolyo nitong mga nakaraang buwan, ang gasolina at diesel ay umaabot na sa mahigit P60 at P50 bawat litro.

Madaling sabihing abnormal ang kasalukuyang sitwasyon dahil ang presyo ng krudo sa pandaigdigang pamilihan ay patuloy ang pagtaas, at sa kasalukuyan nga ay umabot na ang Brent North Sea crude oil sa $145 bawat bariles. Ayon sa ilang eksperto, baka umabot pa ito sa $200 bawat bariles sa loob ng anim hanggang 24 na buwan. Batay sa pahayag ng mga opisyal ng pamahalaan, wala raw magagawa sa ganitong sitwasyon.

Pero kung susuriin ang kasaysayan ng industriya ng langis sa Pilipinas, may nagawa noong dekada 70 nang mangyari ang tinatawag na ”oil shock” na kung saan ang OPEC (Organization of Petroleum Exporting Countries) ay nagdesisyong itakda nang napakataas ang krudong mula sa kanila. Ito ang panahong itinatag ang PNOC (Philippine National Oil Corporation), Petron (na nagsimula bilang marketing arm ng PNOC) at ang OPSF (Oil Price Stabilization Fund) na nakatulong sa pagkokontrol sa presyo ng mga produktong petrolyo.

May mga kahinaan man ang regulasyon noong panahon ng dekada 70 – bukod pa sa adyenda ni dating Pangulong Ferdinand Marcos na huwag nang palalain pa ang sitwasyon sa Pilipinas bunga ng imposisyon ng Batas Militar – mainam na maging bukas tayong lahat sa pagtalikod sa deregulasyon bilang kalakaran sa downstream oil industry.

Tandaan nating 12 taon na ang nakaraan mula nang ipatupad ang deregulasyon at ang tanging positibong ibinunga nito ay ang mas malaking tubo mula sa mga kompanya ng langis at mas malaking koleksiyon ng pamahalaan sa pamamagitan ng buwis.

Ang inaasahang pagbaba ng presyo ay naging imposible sa sitwasyong ang mga produktong petrolyo, hindi tulad ng ibang produkto, ay demand inelastic. Ibig sabihin nito, ang demand para sa mga ito ay hind naapektuhan ng pagtaas ng presyo dahil lubos na kailangan ang mga ito ng publiko.

Sa aking pag-aaral noon ng paggalaw ng presyo ng mga produktong petrolyo ng iba’t ibang kompanya, ang kadalasang ginagawa ng Big Three ay manguna sa pagtataas ng presyo, at ang iba pang mga industry player ay sumusunod sa kanilang itinatakda. Ang kadalasang kaibahan sa mga presyo ng iba’t ibang kompanya ng langis ay umaabot lang ng P0.50 bawat litro.

Simple lang naman talaga ang deregulasyon pero madalas na nagbibigay ng komplikadong paliwanag ang mga nasa kapangyarihan para sabihing mas mainam pa rin ang deregulasyon sa kabila ng nangyayari sa pandaigdigang pamilihan.

Bakit hindi na lang nila amining ang ugat sa sunud-sunod na pagtaas ng presyo ay ang mismong deregulasyon sa downstream oil industry? Dahil sa deregulasyon, walang kontrol ang pamahalaan sa mga presyo, at ang kapitalista ay may kalayaang magtakda ng anumang naising presyo. Kung sabagay, walang dahilan para tutuligsain ang isang sitwasyong kapaki-pakinabang para sa kapitalista, pati na rin sa pamahalaan.

Para makipag-ugnayan sa awtor, pumunta sa http://www.dannyarao.com.(PWeekly)

Public hearing for P2 tricycle fare hike set

July 4, 2008

By FELIPE V. CELINO

ROXAS City – The Sangguniang Panlungsod’s (SP) Committee on Public Utilities will hold a public hearing on the proposed P2 tricycle fare hike tomorrow, July 5, at the Dinggoy Roxas Civic Center.

Chaired by SP member Herbert Chu, the public hearing will start at 9 a.m.

The current minimum tricycle fare is P6.

The Alliance of Roxas City Tricycle Operators and Drivers’ Association (ARCTODA) cited the continuing increase in fuel prices and basic commodities in seeking a fare increase.

In September 22, 2005, the City Council fixed the minimum fare at P6 for regular commuters and P4 for students and senior citizens for the first two kilometers, with an additional P.50 for every succeeding kilometer.

ARCTODA President Joel Perion said premium gasoline was then at P33.45 per liter.
Today, prices of petroleum products are much higher. Period said there has been a 53.66 percent increase.

“This we ask so we may be able to continue providing food for our families and send our children to school,” Perion said.

There are about 3,500 tricycles with approved franchises in this city. The colorum or franchise-less ones number about 500, Perion said./PN

50% INCREASE IN PUMP PRICES OVER PAST YEAR SHOWS URGENCY OF REGULATION

July 3, 2008

Oil prices have increased by an average of 50% over the past year, highlighting the failure of oil deregulation in bringing down petroleum prices and the urgency of reinstating regulation, according to independent think-tank IBON Foundation.

Between June 2007 and June 2008, average pump prices of unleaded gasoline and diesel have increased by 47% and 52%, respectively.

Further, since the start of deregulation in 1996, pump prices of unleaded gas have increased by 492 percent. Meanwhile prices of diesel have increased by 607 percent.

Oil deregulation was supposed to ensure affordable and accessible petroleum products by breaking up the local oil cartel, allowing “market forces” to determine the real price of oil. Instead, it only gave Shell, Petron and Chevron (formerly Caltex), more room for speculation and to dictate prices and price hikes. IBON estimates that as much as 47% to 54% of the pump price of petroleum products represents windfall profits of the oil firms.

An effective way to break up the monopoly control of the oil firms over the local downstream oil sector and ensure affordable and accessible oil products is to revoke the oil deregulation law and give the government regulatory authority over the oil industry. (end)

As Much as P31/Liter of Pump Prices Go to Windfall Profit of Oil Firms

June 30, 2008

The profiteering of oil companies only proves that oil prices are artificially bloated at international and local levels because of the dominance of transnational oil firms over the industry, which gives them the upper hand to practice monopoly pricing and speculation.

BY IBON FOUNDATION
Posted by Bulatlat
Vol. VIII, No. 21, June 29-July 5, 2008

But although the government cannot control the activities of oil firms at the global level, it could minimize the impact of their profiteering and control excessive oil prices by implementing strict regulation of the domestic market.

As much as P31 per liter of the pump price of oil products may be windfall profits of transnational oil firms.

This is based on IBON’s estimate of the real cost of oil at only $31-32 per barrel, consisting of exploration cost, production cost and royalties to the Organization of Petroleum Exporting Countries (OPEC).

Subtracting this from the May 2008 average Dubai spot price of $117 per barrel means that the oil firms may have already earned windfall profits of $86-87 per barrel of crude oil.

Applying this figure to local pump prices (at 159 liters per barrel and an exchange rate of $1:P43) and prevailing prices as of June 14 would reveal that for every liter of unleaded gasoline, P26-P31 goes to total windfall profits. For diesel, P23-P27 per liter goes to profits. This means that oil firms’ profits account for 47-54 percent of the retail price.

The total windfall figures were obtained by combining profits from crude oil price, applying the U.S. Energy Department’s data that crude oil accounts for 48-58 percent of the local pump price, and that 12 percent of the retail price goes to profits (which includes 3 percent that used to make up oil tariffs).

This profiteering only proves that oil prices are artificially bloated at international and local levels because of the dominance of transnational oil firms over the industry, which gives them the upper hand to practice monopoly pricing and speculation.

But although the government cannot control the activities of oil firms at the global level, it could minimize the impact of their profiteering and control excessive oil prices by implementing strict regulation of the domestic market. Posted by Bulatlat

Gasoline up by 626%, Diesel by 746%, since Deregulation

June 30, 2008

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

Noise barrage greets another oil price hike

June 28, 2008

BAGUIO CITY — Militant group Anakbayan led a noise barrage at the KM 0 here Saturday to greet another round of oil price hike. HIGHWAY ROBBERY. Students convey their grievances at yet another oil price hike in a noise barrage protest led by youth group Anakbayan at Kilometer 0 last Saturday. Photo by Myko Franco Chiong/NORDIS In the face of the escalating economic crisis under the Arroyo government, the youth group called for the scrapping of the 12% Value Added Tax (VAT) on oil, electricity, and other basic commodities that most affect the people as well as the economy. Anakbayan calls for a thorough review of the Oil Deregulation Law. The group believes that the government must take an active, pro-people stand now on the issue of oil hikes and the economic crisis. According to Sloan Ramos, Anakbayan Metro-Baguio spokesperson, “This includes immediate and long-term actions, not cash dole-outs.” “With 70% of oil prices going directly to the profit of oil companies, it’s a lie to claim that they have no option but to increase. All they need is the pro-people political will to rollback prices,” he said. “But we won’t expect them to do that.” Further, he said the Arroyo administration’s inability to truly shelter the Filipino people from the economic crisis is “another reason for her ouster.” Anakbayan calls for a series of protest actions in every instance of price increase for oil and other basic commodities. “This noise barrage is only a part of wider and prolonged mass actions on the economic crisis and the Arroyo administration’s misgovernment, leading towards a huge crowd for Arroyo’s State of the Nation Address on July.” Anakbayan says. # Paula Pamintuan-Riva(NorDis)

Pump prices go up again on weekend

June 21, 2008

By Euan Paulo C. Añonuevo, Reporter

Fuel prices are expected to rise again today, as oil firms said they have to recover losses incurred from the soaring prices of crude in the world market.

Oil prices in Asian trade went up on Friday after sliding earlier.

Oil firms in the Philippines are expected to hike prices by another P1.50 per liter after incurring P7.50 in under-recoveries. Earlier, they recovered P3 of the amount, which means that price hikes would continue until July.

Starting June 14, the prevailing domestic price of fuel has been averaging at P55.26 to P57.07 for unleaded gasoline; P52.10 to P55.30 for kerosene; and P48 to P49.97 for diesel.

The price of an 11-kilogram liquefied petroleum gas (LPG) cylinder has been hovering between P615 and P661.

The Department of Energy reported that as of June 20, the monthly average price of the regional benchmark Dubai crude increased by more than $6.50 per barrel compared to the May average.

Also, gasoline and diesel rose by about $8.40 per barrel and $6.50 per barrel to $139.58 per barrel and $168.07 per barrel, respectively, over the previous month levels.

The contract price for LPG rose by $57 per metric ton to $912.50 per metric ton this month.

Dubai crude, gasoline and diesel posted new record highs last week brought about by the sharp depreciation of the dollar against the euro, tensions between Israel and Iran, and the forecast of Morgan Stanley that falling US stockpiles could send crude to $150 a barrel by July 4.

$132 at Asian trade

In Friday’s trading in Singapore, the benchmark oil futures contract, New York’s light sweet crude for July delivery, rose 23 cents higher at $132.16 per barrel.

It had tumbled $4.75 earlier to close at $131.93 in US trade on Thursday following China’s announcement to hike oil prices.

Brent North Sea crude for August delivery rose 45 cents to $132.45 following a drop of $4.44 to settle at $132 in London on Thursday. Both the Brent and New York contracts had fallen in early Asian trade.

China became the latest Asian nation to curb energy subsidies by hiking retail petrol and diesel prices by as much as 18 percent, moving to close the gap between state-set domestic prices and the soaring world oil market.

Analysts said the move by the world’s second biggest oil consumer was important, but differed on its longer-term impact on soaring oil prices, which hit nearly $140 this month from a low under $11 in the 1990s.

“I think it’s very significant,” said Dave Ernsberger, Asia director of global energy information provider Platts. “It is going to eat into demand. I’m pretty sure of that.”

He had called China’s subsidies “the big gorilla in the room” ahead of its price hike announcement Thursday. Experts have said China’s booming economy has up to now been a key driver of the world’s growing appetite for oil.

But the fuel price hike “may temper growth in fuel demand in China, helping moderate demand-based pressure on oil prices,” David Moore, a commodity strategist at the Commonwealth Bank of Australia in Sydney, said in a report.

Fuel subsidy cuts elsewhere in Asia are already said to be hurting regional energy demand. Malaysia has hiked fuel prices by 41 percent and Indonesia by around 29 percent, while Taiwan and India have also raised energy costs.

Looking ahead

The longer-term impact of China’s move on world oil prices would not be clear until later in the year, when numbers about demand are released for the market to digest, Ernsberger said.

“It’s possible we won’t see a big impact on the price until September, October,” he said.

Victor Shum, an analyst at Purvin and Gertz energy consultancy in Singapore, said the impact from decreased demand for oil in China was likely to be small, as higher prices would stimulate production.

“The negative impact in demand growth in China may be more than compensated by increased supply,” Shum said.

Global finance officials fear soaring crude costs pose a threat to world economic growth, as higher inflation leads central banks to raise interest rates.

Thursday’s oil price fall of nearly $5 also came as Saudi Arabia, the biggest producer in the Organization of the Petroleum-Exporting Countries (OPEC), said it planned to increase output by 200,000 barrels per day.

Shum said the Saudi announcement would not have a major impact because the increase is “not that significant compared to the total oil demand of 86 million barrels a day.”

Concerns about lost Nigerian oil output might outweigh the Saudi increase due to the better grade of the African nation’s crude, Shum said.

Anglo-Dutch oil giant Shell said it had shut down a Nigerian offshore oilfield after an attack by militants. The field has a capacity of 200,000 barrels per day.

Hugo Chavez, president of OPEC member Venezuela, said prices should be around $100 per barrel, but “could soon reach $200” given political tension, threats against oil producer Iran and a weak US dollar.

Chavez threatened Thursday to shut off oil exports to European countries if they enforce tough new rules on illegal immigrants.

World leaders are also preparing for a high-level meeting between producers and consumer nations on Sunday in Jeddah to discuss soaring prices.
— With AFP(ManilaTimes)

On Pessimism and Hope Amid the Surge in Oil Prices

June 19, 2008

Pessimism among the Filipino people is worsening.  This is understandable as there is not let-up in increases in oil prices. Pump prices have already increased 14 times, as of this writing, since the start of the year.  But there is still hope; and hope lies on the people themselves.

BY BENJIE OLIVEROS
ANALYSIS
Vol. VIII, No. 19, June 15-21, 2008

Pessimism among the Filipino people is worsening.  This is understandable as there is not let-up in increases in oil prices. Pump prices have already increased 14 times, as of this writing, since the start of the year.

A first-quarter survey conducted by the Social Weather Station (SWS) for Business World showed that while 29 percent are still optimistic about their quality of life, a slight movement from the 30 percent recorded in December 2007, 23 percent are already pessimistic, an increase from 16 percent last year.

Pessimism about the economy are a lot worse.  According to the latest SWS survey, 45 percent are pessimistic about the economy, a jump from the 37 percent recorded last year.  Those who are still optimistic about the economy dropped to 15 percent from 17 percent.

It is interesting to note that in the graph produced by SWS, pessimism about a change in the quality of life has remained consistently high and optimism consistently low under the Arroyo government compared to the previous administrations.  Pessimism momentarily dropped and optimism only slightly increased in 2007. This in spite of the hype that the country is about to reach “First World” status.

And to think, the survey covered only the first quarter of the year.  Increases in pump prices accelerated during the second quarter. The single biggest increase in pump prices at P1.50 was imposed twice in a row the past two weeks.  Recent announcements by the Arroyo government and oil companies reveal that there is no relief in sight as more increases are forthcoming.

What makes the situation more burdensome is that the surge in oil prices is accompanied by increases in rice, pork, and other food prices.  No amount of assurances by the Arroyo government that the crisis is ‘manageable’ could deny the fact that people are finding it more and more difficult to cope with the price increases.  The Arroyo government even keeps on repeating the false claim that it could not do anything about the price increases except to distribute crumbs.

Given these, it is but understandable for people to see a bleak picture ahead.  But there is still hope; and hope lies on the people themselves.

People all over the world are starting to rise up to confront the problem of oil price increases.  Truck drivers in Spain declared an indefinite strike and blocked the country’s border to and from France. They joined Spain’s fishermen who have been on strike against oil price increases.

Truckers in France followed suit and blocked their side of the border while 200 other French haulers drove around Bordeaux in a slow convoy. They were joined by taxi drivers. Truck and taxi drivers did the same in Paris. Farmers outside Lille, the northern industrial city of France near the border with Belgium, drove around in their tractors as a form of protest; 16 Total petrol stations were blocked also by farmers; 300 to 500 farmers rallied in the eastern city of Mertz riding behind cart-horses on a mixture of bicycles and rollerskates; and 500 farmers in Toulouse, in southwestern France also staged their own protest action. Fishermen in France have been on strike for three weeks and they blocked roads leading to oil depots in at Fos-sur-Mer near Marseille in the south and Marmande in the southwest.

Fishermen in Italy, Greece, and Portugal followed suit. Earlier, Italian fishermen have already been blockading fish ports as a form of protest. Dairy farmers in Germany also went on strike.  They were followed by farmers in Austira, Demark, Holland, and Belgium.

In Portugal, truck drivers also launched an open-ended strike threatening to block the flow of goods to the south.  In Britain, around 300 trucks are expected to converge in London on July 2 and the Road Haulage Association, with members all over England, would conduct a protest action at the same time.  About 100 truckers in Wales also held a protest action.  Truck and taxi drivers drove around Sofia, capital of Bulgaria, to protest government inaction on oil price increases. Unions of small trucking firms from seven European Union States, including France, the Netherlands, Hungary, and Slovenia would meet soon to coordinate protest actions.

In India, protests broke out in Kashmir, and India’s communist parties, which have a strong following in West Bengal and Kerala, have called for week-long protest actions. Protests have also broken out in Kuala Lumpur, Malaysia.

Locally, the Bagong Alyansang Makabayan (Bayan or New Patriotic Alliance) and its member organizations, which includes the Kilusang Mayo Uno (KMU or May 1st Movement), GABRIELA, the Alliance of Concerned Teachers, Health Alliance for Democracy, the Promotion of Church People’s Response, among others, have been holding weekly protest actions, mostly noise barrages and pickets, to demand that the Arroyo government takes more decisive and effective measures such as the removal of the VAT on petroleum products and the repeal of the Oil Deregulation Law to mitigate the effects of the surge in oil prices and to protect the Filipino people against the price manipulation of big oil companies and speculative attacks of financial investment houses and banks.

It is foolish to say that nothing can be done to control and put a stop to the surge in oil prices.  After all price manipulation and speculative attacks are being done by corporations and not supernatural beings. The Arroyo government refuses to heed the people’s demands because it is more interested in the increasing VAT collections it gets with the oil price increases and in currying the favor of oil companies and other foreign investors.  It is up to us to force the Arroyo government to act or to suffer the consequences of refusing to do so. Bulatlat

Amid Oil Crisis: No Need for Emergency Powers Yet, DoE Says

June 11, 2008

But public warned to ‘expect the worst’

While oil prices in the international market are soaring and projected to hit US$200 per barrel before December, the Department of Energy (DoE) claimed that the situation is under control and there is no need—as of now—to give emergency powers to President Gloria Macapagal-Arroyo. However, Energy Secretary Angelo T. Reyes Jr., said that the country must expect the worst now that pump prices of gasoline and diesel have breached the level of P50 (US$1.124) per liter and transport groups are not totally abandoning their demand for a fare hike, despite the “withdrawal” of their petition to the Land Transportation Franchise and Regulatory Board (LTFRB).

BY NOEL SALES BARCELONA
Contributed To Bulatlat
Vol. VIII, No. 18, June 8-14, 2008

While oil prices in the international market are soaring and projected to hit US$200 per barrel before December, the Department of Energy (DoE) claimed that the situation is under control and there is no need—as of now—to give emergency powers to President Gloria Macapagal-Arroyo.

However, Energy Secretary Angelo T. Reyes Jr., said that the country must expect the worst now that pump prices of gasoline and diesel prices have breached the level of P50 (US$1.124) per liter and transport groups are not totally abandoning their demand for a fare hike despite the “withdrawal” of their petition to the Land Transportation Franchise and Regulatory Board (LTFRB).

In the weekly Kapihan sa Sulô in Quezon City, the energy chief said that they are still talking about short- and long-term solutions to the surge in oil prices.

Measures such as the promotion of the use of compact natural gas (CNG) and liquefied petroleum gas for public utility vehicles, tariff cuts on crude imports (which was done earlier) and the promotion of the use of biofuels in industries and transport, are more likely to be considered, he said.

“But for now, all we need to do is to conserve and cut down on our fuel consumption,” Reyes said, adding that it is not government’s sole responsibility to find solution to the crisis.

“Expect food prices to soar due to higher transport cost,” Reyes added.

On the issue of suspending the 12-percent value-added tax (VAT) on oil, Reyes explained that it is hard for the administration to do so for it is mandated by law. The law he was referring to is Republic Act No. 9337, more commonly known as the Restructured Value-Added Tax Law, which was passed in 2005.

“Unless we repeal or amend the law, then the suspension or the removal of VAT on oil can’t be imposed,” said Reyes.

Asked about the possible re-opening of the US$2.3-billion Bataan Nuclear Power Plant (BNPP), which was mothballed in 1987, Reyes replied that it is easier said than done.

Some groups are lobbying for the reopening of the controversial power plant but Reyes clarified that government needs at least US$800 million (P35.585 trillion) to rehabilitate the plant and the public must wait another five years before the BNPP can be fully operational.

On the other hand, independent think-tank IBON Foundation, Inc., said that it is the proper time for the government to take a stand and regulate the domestic prices of oil.

In the statement published in their official website (http://www.ibon.org/), the think tank stated that the recent pronouncements of the Big Three (Petron, Caltex and Shell) that they need to increase their prices by as much as P10 to P11 ($0.22 to $0.24) per liter highlight the urgency of reinstating regulation of the oil industry.

The government has lost its power to control prices of petrol in the local market after the Downstream Oil Industry Deregulation Law was implemented in 1998. Contributed to Bulatlat

Editrial Cartoon: Conserving Power

June 8, 2008

Pinilipit na ang tao, pilipit pa ang dahilan.

Gov’t appeals: Conserve fuel, power

June 8, 2008

Local prices up anew; record $ 139 in global market; 14th increase announced, with no end in sight

By DAVID CAGAHASTIAN & MYRNA M. VELASCO

Malacañang appealed to the people yesterday to conserve gasoline and electricity amid another round of oil price increases during the weekend and prospects of more price increases in the coming weeks.

Deputy Presidential Spokeswoman Lorelei Fajardo said the government can do nothing to stop the oil price increases, as the Philippines merely imports oil and is vulnerable to the market forces that drive oil prices up.

“The best thing that we can do is to conserve not only electricity but also gasoline,” Fajardo said in an interview with government network Radyo ng Bayan.

“Kung kinakailangan — at sabi nga, mas healthy — maglakad, mag-bike, mag-carpool tayo. Maraming means na maaari ding gawin ng publiko, hindi lamang ng pamahalaan,” she said.

She said the government can only give out subsidies on fuel for public utility vehicles and for households who consume very little electricity, to mitigate the effects of high oil and food prices on the poor.

Fajardo said the government is taking the lead in conserving energy. President Arroyo had earlier ordered all government offices to turn off their air conditioning units by 4 p.m. every day and to replace their incandescent bulbs with more energy-efficient flourescent lights to conserve electricity.

Fajardo said the government is also drafting a P2 subsidy for public utility vehicles from the P18-billion revenues from the Expanded Value-Added Tax collections of the national government.

Local oil companies

raise prices for 14th

time this year

The local oil companies implemented twin increase in their prices over the weekend, raising gasoline and diesel pump prices by P1.50 per liter and liquefied petroleum dgas (LPG) by P1 per kilogram.

The adjusted prices took effect at 12:01 a.m. and 6 a.m. on Saturday. The price hikes were initiated by small oil player Flying V and immediately followed by all the other companies — Pilipinas Shell Petroleum Corporation, Chevron Philippines which carries the Caltex brand, Unioil, and Petron Corporation.

Further increases in pump prices are expected in the coming weeks as the companies continued to collect on previously computed increases. In the world market, global prices hit a new all-time high record of $ 139 per barrel in last Friday’s trading at the New York Mercantile Exchange – which will be reflected in future local price increases.

The price increases in the Philippine oil market are already the 14th price adjustment this year and there is no end in sight yet.

Unoil said its new round of adjustment was “due to the continued increase in the prices of petroleum products in the world market and to partially recover its losses.”

Rafael Ledesma of Petron’s public affairs office advised media that for its fuels, “we are still reflecting the increase in Dubai crude by more than $ 16 per barrel in May,” which hit an average of $ 119.50 per barrel.

The contract price for LPG climbed substantially this month by $ 55 per metric ton from last month’s $ 852.50 to $ 907.50 per metric ton.

The oil companies are now getting cautious about giving forecasts or estimates on how pump prices would behave in the coming weeks or months, after Energy Secretary Angelo T. Reyes directed to stop doing so.

After shaving off $ 8 per barrel from the price last week, world oil prices rallied anew this week by about $ 16 per barrel because of what market observes as a “buying rush” hinged on the intensifying tension between Israel and Iran that have been fueling speculations of potential supply worries.

Some market analysts are forecasting that oil prices may go to as high as $ 150 per barrel by July 4 because of a projected increase in the demand of the United States for its coming travel holidays.

Market speculations are seen exerting pressure on global oil prices; and these are compounded by worries over the weakening value of the American dollar and the declining oil stockpile of the US.

Rising demand on oil is reportedly triggered by China and other developing economies; and coupled by the influx of oil buyers which are hedging against inflation when the US dollar falls.

Analysts have noted that “supplies have been affected by low capacity expansion and declining yields (in oil-producing countries), while demand has surged largely due to growth in emerging markets.” (Myrna M. Velasco)

Global oil price

hits record $ 139

a barrel on Friday

By MATTHEW ROBINSON

NEW YORK (Reuters) — Oil jumped nearly 9 percent to a record $ 139 a barrel on Friday, extending a two-day rally to more than $ 16 as the slumping US dollar and mounting tensions between Israel and Iran attracted a stampede of buyers.

Oil prices could top $ 150 by July 4, one of the busiest US travel holidays, as strong demand in Asia triggers a slowdown in shipments of crude to the United States, investment bank Morgan Stanley said.

“We are calling for a short-term spike in oil prices,” the bank said in a research note.

US crude settled up $ 10.75 at $ 138.54 a barrel before touching an all-time high of $ 139.12 in its biggest gain in dollar terms on record, adding to a rise of $ 5.49 on Thursday.

London Brent crude settled $ 10.15 higher at $ 137.69, off the record 8.12 hit earlier.

“It’s eye-popping. It’s absolutely stunning,” said Chris Feltin, analyst at Tristone CapitaL Inc in Calgary.

Oil has risen 44 percent this year, threatening economic growth in major consumer countries including the United States, whose economy already is hobbled by a housing crisis.

Analysts have said the dramatic rally in oil prices is due to rising demand in China and other developing economies as well as an influx of cash from investors seeking a hedge against the weaker dollar and inflation.

The greenback extended weakness against other currencies Friday on data showing the US economy lost jobs for the fifth straight month and the unemployment rate shot up to its highest in more than three years.

The drop in the dollar added to losses from Thursday when European Central Bank President Jean-Claude Trichet said a number of policymakers wanted higher interest rates, possibly as soon as next month. USD/]

“Obviously there’s a lot of concern on the economic impacts of a weakening US dollar. That seems to be driving some of the momentum here today,” said Feltin.

Further support came from remarks by Israel’s transport minister that an attack on Iran’s nuclear sites looked “unavoidable.” It was the most explicit threat yet against Tehran from Prime Minister Ehud Olmert’s government.

Worries of a potential disruption of the OPEC member’s crude supply have helped support prices over the past year.

“We’ve had a huge historic rally on little fundamental input, other than the weakness of the dollar and the news this morning out of Israel that seems to have pushed some geopolitical risk premium back in the market,” said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois.

Morgan Stanley forecast the diversion of Middle East oil shipments away from the United States to Asian markets could push US crude to $ 150 a barrel by the US July 4th holiday.

“Middle East oil exports are stable, but Asia is taking an unprecedented share,” Morgan Stanley said in a report, adding US inventories have dropped by 35 million barrels since March.

“Robust Asian non-OECD demand growth, coupled with a stagnant global oil supply backdrop, appears to be pricing out Atlantic basin consumers while at the same time driving Atlantic inventories to critically low levels.”

The report added to a string of upward price forecast revisions by analysts, with Goldman Sachs in May predicting prices could tip $ 200 a barrel within the next two years.

A six-year rally in oil has sent prices up six-fold as demand from emerging economies such as China and India strain supplies.

High prices have started to eat away at global growth however, with some consumers such as the United States and the United Kingdom showing signs of lowering consumption.

Some Asian governments — including India — have decided to cut fuel subsidies, stirring concern rising prices could cut further into demand.

The International Energy Agency (IEA), an adviser to 27 industrialized countries, said it may cut its 2008 demand growth projection further after having already more than halved it to 1.03 million barrels per day (bpd).(MB)

============================

My Take:

Funny.  The gvernment who displays unequaled love for corrupt generals and public officials is now calling for us to tighten the belt.

Instead of scrapping the oil dereulation la, instead of looking for cheaper source of oil (such as venezuela), instead of prosecuting the big-time oil smuggler and the cartels, they want us to tighten our belts!

Ni hindi nga nila magawang ibigay ang P125 minimum wage hike across the board eh.  bwisit!