LPG issues

(Photo from AFP)

Amid reports of a supposed “shortage” in supply of liquefied petroleum gas (LPG) in the country, the House of Representatives committee on energy chaired by Rep. Mikey Arroyo has scheduled a probe (on Feb 3) on the issue. Meanwhile, the Department of Energy (DOE) has warned LPG dealers that they will be charged with profiteering if they retail their 11-kilogram (kg) cylinder tanks at more than P500.

But these efforts of the House and the DOE are futile in the context of a deregulated downstream oil industry. For one, the de facto “price cap” imposed by the DOE on 11-kg LPG tanks contradicts the spirit of deregulation, which is to allow the so-called market forces to determine the prices of oil products.

Interestingly, a quick check at the price monitoring of the DOE posted at its website will show that several LPG brands are in fact being retailed by more than P500. As of January 21, the Caltex LPG retails by as high as P520 in Metro Manila; Catgas, P525; and Philgas, P520. If the DOE is serious with its threat to penalize profiteering LPG retailers, then it only needs to look at its own price monitoring and punish the guilty firms. Then again, how can the DOE penalize oil firms retailing LPG at more than P500 when they can conveniently argue, as they have done many times in the past, that they have simply considered supply, demand, competition, and other market factors in their pricing?

Secondly, any investigation on the reported “shortage” of LPG supply will only meet a brick wall if the House committee on energy will not recognize how deregulation has only strengthened the monopoly existing in the LPG market. Its apologists claim that because of deregulation, “new players” have significantly cut into the LPG market monopolized by the Big Three (Petron, Shell, and Chevron).

But despite the entry of the so-called “new players” under the deregulation regime, almost 92% of the domestic LPG market is still monopolized by only four companies: Petron accounts for 37.8% of the local LPG market, followed by Liquigaz (24.6%), Shell (20.5%), and Total (8.7%). Petron acquired the LPG retail business of Chevron in June 2007 and now retails the “Caltex LPG”brand. Total, on the other hand, has a 15% stake in Shell Gas Eastern Inc. through a joint venture with Shell. Liquigaz is a local subsidiary of SHV Gas, the world’s largest retailer of LPG based in The Netherlands.

Any issue about “shortage” should be adequately explained by these four companies. Any probe on lack of LPG must start on an investigation of these firms, which overwhelmingly control depots, terminals, and refilling stations and hold the widest network of dealers in the country. But will Rep. Arroyo and DOE secretary Angelo Reyes go after them or will they merely pin the blame on the small retailers such as the members of the LPG Marketers’ Association (LPGMA)? But going after these big companies is tantamount to an admission that deregulation has failed, the same policy that Mrs. Gloria Macapagal-Arroyo has vehemently defended against all odds.

As long the downstream oil industry is deregulated, Filipino consumers will have no security in LPG and oil supply. Worse, consumers will continue to be hapless prey to abusive oil companies that charge overpriced petroleum. As of this writing, the country’s four biggest LPG retailers (Petron, Liquigaz, Shell, and Total) have already implemented an identical P2 per kg hike in LPG prices. They claim that the international (Saudi Aramco) contract price of LPG has jumped from $336.5 per metric ton in December 2008 to $380 this month.

But using the Dubai crude price movement as well as changes in the US dollar-peso exchange rate, oil companies should actually still rollback the retail prices of LPG by P60.81 per 11-kg cylinder tank The amount represents the “overpricing” that the oil firms have implemented for the entire 2008.(END)

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Oil products still hugely overpriced

Despite the continued rapid decline in global oil prices last month, petroleum products in the country remain hugely overpriced as oil firms refused to implement substantial rollbacks in domestic pump prices.

gas-station1Latest estimates by the Bagong Alyansang Makabayan (Bayan) show that as of December 2008, diesel is still overpriced by P9.56 per liter; kerosene, P12.60; unleaded gasoline, P3.57; and liquefied petroleum gas (LPG), P60.81 per 11-kilogram (kg) cylinder tank.

The December average of Dubai crude, the country’s benchmark in pricing oil products, further declined to $40.53 per barrel (bbl), down 18.7% from its November average and 69.1% lower from its peak level in July. Overall, the price of Dubai crude fell by 5.1% a month last year, with steep cuts in the second half offsetting the huge increases posted in the first half of 2008.

On the other hand, the peso weakened against the US dollar last year. It started the year at P40.90 in January, showed slight appreciation in February before depreciating progressively for the rest of 2008. By December, the foreign exchange (forex) rate was pegged at a monthly average of P47.98 per US dollar.

Actual monthly changes in the pump prices of diesel last year have resulted in a net impact of a reduction of P3.17 per liter; kerosene, 13 centavos; unleaded, P9.16; and LPG, P189.70 per 11-kg cylinder tank. These actual adjustments are much lower than the estimated “ideal” adjustment of P12.73 per liter (or P250.50 per 11-kg LPG tank) in rollback, thus resulting in overpricing.

Bayan’s overpricing estimates looked at the monthly averages of Dubai crude and forex and their combined impact on domestic pump prices. The results (“ideal” adjustment) were then compared with actual monthly price changes at the retail stations as monitored by the Department of Energy (DOE). The impact on domestic prices of Dubai crude and forex adjustments varies depending on the levels of these variables. In December 2008, for instance, a $1 per bbl adjustment in the price of Dubai crude translated to a 34 centavo per liter adjustment in domestic pump prices. Meanwhile, a P1 adjustment in the forex rate translated to a 29 centavo per liter adjustment in domestic pump prices.

But it must be emphasized that such “overpricing” estimates simply refer to the disparity between the adjustments in domestic pump prices and global oil prices. It does not reflect the much bigger overpricing that the oil transnational corporations (TNCs) impose on the market through their monopoly control of the upstream and downstream global oil industry.

Global trends

The year 2008 saw a roller coaster ride in prices of crude oil and petroleum products. In the first week of January, global crude oil price breached what analysts called the “psychological barrier” of $100 per barrel mark for the first time. At one point in July, crude oil traded at an all-time peak of more than $147 per barrel in the world market. Then a month later began the steep decline in oil prices and by December, crude oil was trading at under $33 per barrel. From an earlier forecast of global crude oil price reaching as high as $250 per barrel “very soon”, one estimate now predicts prices to fall to as low as $30 per barrel in first quarter next year. Thus, said one analyst, “2008 will go down as one of the most volatile and difficult years ever for oil. It was a year that started with runaway prices and all the makings of the worst inflation in nearly three decades. It is ending with imploding deflation and worst recession in seven decades”.

Some analysts have identified the “combination of the slowdown in the global economy, which is damp oil demand, and higher production from the Organization of Petroleum Exporting Countries (OPEC)” as the major reason for the reductions in world oil prices since July. OPEC, for its part, listed “lower demand especially in the developed countries, increased oil supply, the strengthening of the US dollar and easing of geopolitical tensions” as the factors behind the decline in global prices.

But an independent report released last year by the US Senate pointed to speculators as responsible behind the rapid rise and subsequent steep fall in oil prices this year. The report said that from January to May, index traders poured $60 billion into commodity markets causing a big spike in oil prices. But when the US Congress held hearings in May to July to curb speculation, traders pulled $39 billion from the market. One of the authors of the report summed up their findings, to wit: “The bottom line here is with regard to commodities, money going in pushes prices up, money going out pushes prices down”.

Wild spikes in the global price of crude oil experienced last year underscore the depth of speculation in the oil market. The prices quoted above actually refer to those of so-called “crude oil futures” as traded in the New York Mercantile Exchange (NYMEX) and the London ICE Futures. Futures market does not involve the physical trading of crude oil but are engaged in by giant investment banks and other financial companies and the oil majors to earn huge profits from speculating on the future price of oil. When oil prices were posting record high numbers in the first half of the year, speculation was estimated to account for as much as 60% of global oil prices.

Indeed, the extreme price swings of oil in 2008 further strengthened the claim that speculation, not actual supply and demand, is behind the world oil price movement. Between January and July, the monthly average prices of crude oil increased by 41% (WTI crude) to 50% (Dubai crude). But between July and December, prices declined by 68% (Dubai and Brent crudes) to 69% (WTI crude). Meanwhile, global oil demand in fourth quarter 2008 was pegged at 85.6 million barrels per day (mb/d), down by only less than 1.4% from its first quarter level. Supply, on the other hand, was recorded at 86.5 mb/d in December, down by only less than 1% from its January average. The figures indicate that there are no very significant changes in the supply-demand balance of crude oil last year that could fully explain the very sharp rise and fall in prices.

2009 prospects

The US recession and the global economic crunch are expected to deteriorate in the coming months. The Philippines is already starting to feel the direct impact as trade and investments slowed down. More overseas Filipino workers (OFWs) face the imminent threat of displacement while the domestic labor market further contracts. All this is only mitigated by easing inflation, mainly due to lower oil prices. But even this “mitigating” factor is offset by unabated oil price manipulation under the ODL.

In addition, the global oil market remains vulnerable to speculation and as such local pump prices could again steeply climb in the coming months primarily due to renewed speculative attacks. The volatile financial market, which in one week saw the demise of two of the US’s mightiest investment banks triggered fresh rounds of speculation. Trading of crude oil futures contracts at the NYMEX for October delivery jumped at one point by $25 per barrel on September 22 – its biggest single-day surge ever – one week after the upheaval at Wall Street. The unusual price hike compelled the Commodity Futures Trading Commission (CFTC) to subpoena trading records from some NYMEX traders to look into possible “illegal manipulation” of prices.  Israel’s intensified military attacks against Gaza in December has triggered fresh rounds of massive speculation that drove oil prices up by 23% in the week connecting 2008 and 2009, the most since August 1986.  Prices of oil futures have been on a steady uptrend since Israel started bombing Gaza and further escalated since the start of the ground assault on January 4.

Furthermore, as the global crisis worsens, oil prices become even more vulnerable to intensified speculative attacks. With the bursting of the housing bubble, more speculators are expected to shift from real estate speculation to speculation in the futures market on commodities including oil. The expected slowdown in real demand as a result of the worsening US recession may not deter traders from speculating on oil since the backdrop for continuing speculation such as the political instability in the Middle East remains. Emerging oil price trends in the light of Israel’s military offensives in Gaza clearly illustrate this.

While Malacañang pretends to run after the oil companies for not implementing substantial price rollbacks, the Arroyo administration’s continued adherence to the ODL and continued imposition of the VAT on oil betray its lack of genuine intentions to lower pump prices. Thus, consumers must rely on their own strength to compel Congress to implement the necessary corrections in oil policies that will truly promote and protect the public and national interests.

2008 was indeed a rollercoaster ride in oil prices – but whether international prices shot up astronomically or steeply declined, Filipino consumers in the end still paid for exorbitantly priced oil. 2009 is certainly even more tumultuous as the recession in the US and other major industrial economies deepens and further aggravate the permanent crisis of the pre-industrial Philippine economy. The country’s already chronic job scarcity is expected to worsen as overseas Filipino workers (OFWs) and those employed in affected local sectors such as exporter manufacturing firms start to feel the pinch of the global economic crunch. The situation could easily deteriorate once prices of basic consumer goods and services again unjustly escalate, which is to be expected as long as government insists on the already discredited principles of free market economics such as the ODL.

Policy makers must now seriously rethink the deregulation policy and put in place a mechanism for effective oil price control to ensure reasonable oil prices and help cushion the impact of the raging global crisis.

Worsening permanent crisis amid the global crunch

In her New Year message, Mrs. Gloria Macapagal-Arroyo described 2008 as “tumultuous” due to the global recession. But fortunately, according to her, this “has not become a crisis in the Philippines”. In several occasions, Mrs. Arroyo had credited her “tough, unpopular” decisions for supposedly cushioning the impact of the world economic crisis on the country.

poverty1Malacañang assures Filipinos that the economy will not be in recession (i.e., two consecutive quarters of fall in the gross domestic product or GDP) this year. We are repeatedly told that the economy and the people are resilient. With supposedly correct policies and sound fundamentals, the country could weather the storm rocking the world’s largest industrial economies. However, the definite effects of the recession in the US and other major capitalist economies on the Philippines could not be denied. The National Economic and Development Authority (NEDA) already said that the GDP growth in 2009 will further slow down to 3.6%. The GDP has started to decelerate last year posting a third quarter growth of 4.6% from 2007’s 7.1%.

The structural defects of the domestic economy – fashioned and strengthened through centuries of colonialism and decades of neocolonialism – have tied a great majority of the Filipino people to perpetual and worsening poverty, have denied local productive forces of any real shot at genuine industrialization, and have condemned the economy to a permanent state of crisis. In the face of what some analysts describe as its worst crisis ever, US imperialism, which is primarily responsible for the country’s own permanent crisis, shall become more vicious in its exploitation, plunder, and aggression. This in turn will translate into more bankruptcies, joblessness, and poverty in the Philippines, feeding ever worsening social discontent and unrest, especially under the hugely unpopular Arroyo administration.

Emerging economic trends

1. Falling exports

The US remains the single largest market for commodities produced and shipped from the Philippines, directly absorbing 16.28% of the country’s total exports from January to September 2008. In addition, it is estimated that as much as 70% of the country’s exports are dependent on the US (and EU) market through networks of subcontractors, joint ventures, and affiliates established by its transnational corporations (TNCs) operating in China, the NIES and ASEAN countries, which directly consume a huge portion of Philippine exports of intermediate goods.

This early, the impact of a contracting export market is already being felt by the country. In October 2008, exports fell 14.9%, the worst in seven years. The drop was attributed to falling US demand for electronic products, which comprised 59% of the country’s total export receipts. Electronic exports slumped by 18.9%, as big US-based electronics retailers start to close shop due waning consumer spending.

Because the country’s supposed export-winners are import-dependent, falling imports of materials and components for their manufacture indicate the depth of the impact of the global crisis on Philippine exports in the coming months. The January to September 2008 imports of electronic products declined by 26% as electronic firms cut production due to the global economic crisis, and this will impact on electronic exports in the months ahead. While falling imports ideally could mean increasing local content of exports and thus a positive development, such contraction, in the context of the Philippines, is described by mainstream economists as a “sign of a weakening economy” and a “worrisome situation”.

2. Worsening destruction of domestic jobs and livelihood

As domestic production is in the main dictated by the whims of foreign capital and markets, primarily of the US and other centers of monopoly capitalism, the economy continues to fail to generate enough jobs and livelihood for the people. The huge army of unemployed Filipinos in fact continues to grow as imperialist globalization has further destroyed the domestic productive sectors that could provide local employment. With the worsening of the cyclic crisis of the US economy and global monopoly capitalism in general, domestic production will be further undermined and consequently, millions more of Filipinos will be added to the number of jobless.

Job scarcity is at its worst under the Arroyo administration. From 2001 to 2007, the official annual unemployment rate has consistently remained double-digits, with the yearly jobless rate pegged at almost 11.3% and almost 4 million workers unemployed every year. Due to the global crisis, the overall domestic unemployment situation is turning from bad to really, really worse. The Bureau of Labor and Employment Statistics (BLES) noted the three-year downtrend in what it calls “job opening rate”, a measure of the tightness of the labor market and an indicator of the economy’s ability to create new jobs. From 2005 to 2007, the job opening rate has been progressively declining and was pegged at 1.21%, with agriculture and manufacturing posting the lowest rates.

With the global economic crisis seen to deteriorate in the coming months, Filipino workers should indeed brace themselves for even more severe job insecurity and even more dwindling local employment opportunities. Around 1/3 of manufacturing employment can be found in the EPZs and thus will be directly hit hard by the falling US and global demand. The impact could be greater considering that EPZ locators have also built their own local subcontracting networks to further cut labor costs.

The much-hyped employment driver aggressively promoted by the US-GMA regime, the BPO service subsector, could be hit in the immediate term by slowing demand and possibly investment from the US, the country’s number one BPO client and investor. One BPO firm, Advanced Contact Solutions (ACS), has reportedly downscaled its workforce by about 900 call center agents in November due to declining business volumes from the US. But over the long-term, the BPO sector may continue to thrive precisely because of the never-ending efforts of TNCs in the imperialist countries to cut production cost and increase profits. However, this also means intensified exploitation of the country’s cheap labor as call center agents face even more depressed wages and exploitative and oppressive working conditions. Employment in the BPO firms will thus continue to grow until the next episode of the periodic crisis of the US and other monopoly capitalist countries.

3. Increasing exploitation Filipino migrant workers

The domestic job crisis is mitigated only through labor export, which under the Arroyo administration has been officially proclaimed as government policy for job creation. As of December 2007, there are 8.73 million overseas Filipinos at any given time, of which more than 2.8 million are based in the US (of which, in turn, 2.5 million are immigrants or permanent residents), according to official records.

Like the case of BPO, OFW deployment could be undermined in the immediate term by the raging global economic crisis. Domestic helpers who accounted for the largest portion of newly-hired OFWs last year at 15.6% of the total, for instance, could be immediately vulnerable as households in recession-hit countries like Hong Kong, Singapore, and Taiwan cut costs to cope with the crisis. In the US’s agriculture and service industries, more than 50,000 OFWs were already “possibly” displaced, according to a government report. Readying itself for the possible influx of jobless OFWs, the government has devised a contingency plan to redirect them to other potential foreign labor markets or to encourage those with savings to start a small business.

This betrays the lack of any comprehensive and long-term government plan to invigorate domestic sources of growth that could sustain local job creation.

But then again, since OFWs are a reliable provider of cheap labor power, American and other foreign businesses will continue to hire them, although expectedly at even more exploitative terms. The crisis in fact creates more conditions including the feared increase in number of undocumented OFWs as displaced migrant workers refuse to return home since no jobs await them, that make OFWs even more vulnerable to various forms of abuse and exploitation.

4. Intensifying economic liberalization

To address its economic crisis caused by overproduction, the US and other rich countries are also expected to become more aggressive in pushing for more trade and investment liberalization. Recent pronouncements by the imperialist powers, such as in the APEC and G20 meetings last year, indicate a renewed drive to further pry open the markets of neocolonies to accommodate their surplus commodities and create new openings for their capital to operate and squeeze more profits from the cheap labor and cheap raw materials of the Third World.

The imperialist powers find a ready and reliable ally in the Arroyo administration in its efforts to push for increased free trade. The regime has been aggressively pursuing new bilateral and regional FTAs in a misguided endeavor to increase access to export markets and invite more foreign investments for job generation. Last October, the Senate, under tremendous pressure from Malacañang and the Japanese government and businesses, railroaded the ratification of the Japan-Philippines Economic Partnership Agreement (JPEPA). Also in the pipeline is a Partnership Cooperation Agreement (PCA) with the EU as part of the process to establish an EU-ASEAN FTA. The RP-EU PCA formal negotiations will this year. And finally, the stalled negotiations for an RP-US FTA are expected to be revived soon as the US intensifies efforts to surmount its recession.

In terms of national policies, the US-GMA regime has recognized that trade and investment liberalization may have already reached its limits and thus the only way that the domestic economy can achieve more liberalization is through Charter change (Cha-cha). GMA said so herself in a roundtable with the business sector last October that the “next liberalization has to be through the Constitution… to liberalize economic provisions… mostly the 60-40 restriction (on foreign equity)”.

5. Increasing desperation for foreign capital

While tighter access to credit, aid, and investments may be felt in the immediate term, the export of capital from the monopoly capitalist economies to the neocolonies will continue and intensify. The export of capital remains one of the imperialist means to extract profits from the neocolonies and to accelerate the rate of profits. Usurious debt payments from the neocolonies, for instance, have remained a steady source of financial profits for the banks and financial institutions controlled by monopoly capitalists in the US, Europe, and Japan. From 2001 to June 2008, the cumulative debt service burden (interest and principal) already reached $56.66 billion – more than enough to wipe out the current external debt of $54.81 billion.

However, the bigger danger for the Philippines in the long run is not so much that it will have less access to foreign loans but that commercial creditors and the bilateral and multilateral banks will impose even more usurious terms and impose even more painful restructuring as conditionalities in their desperate attempts to get out of the crisis and increase profit rates.

With more foreign exchange actually being squeezed from the country through foreign direct and portfolio investments, ODA and foreign debt, and through colonial trade as mentioned earlier, it is OF remittances that really save the day for the country in terms of foreign exchange earnings and in keeping the dollar-dependent national economy afloat. Most of the OF remittances come from the US, which accounted for 55.2% of the accumulated remittances from 2000 to September 2008 of around $82.13 billion. OF remittances is the single largest factor that sustains the Balance of Payments (BOP) position, which measures the foreign exchange transactions between the domestic economy and the rest of the world. However, the BOP surplus may not last for long as the global economic crunch intensifies and investors particularly from industrialized countries resort to “risk aversion” as an immediate reaction to protect their wealth. While most OFWs may be able to keep their jobs or are able to find other jobs illegally as discussed earlier and deployment continues, migrant workers face the reality of even cheaper wages or lower incomes. Combine this with even higher taxes and higher consumer prices and cost of living like what is happening in the US, the migrants’ remittance flows will certainly be not as brisk as before which will affect not only the BOP’s current account but household spending and domestic production as well.

6. Aggravating poverty and inequities

The years leading to the three-decade high GDP growth of more than 7% in 2007 ironically have been characterized by a dramatic increase in the official poverty figures. Between 2003 and 2006, the number of poor Filipinos grew by 3.8 million, according to the government. It was also in 2007 that the most number of Filipinos have perceived themselves as hungry, based on the regular hunger survey of the Social Weather Stations (SWS). This phenomenon highlights structural flaws in the country’s economic system which could not only produce enough wealth for its own industrialization but also whatever little wealth it creates is monopolized by TNCs and other foreign corporations and share what is left to their local agents composed of compradors and landlords.

In the face of even more dwindling wealth available in the domestic economy as the imperialist crisis worsens, local compradors and landlords will be even more aggressive to consolidate and expand their control of whatever wealth is left in the domestic economy. As such, bureaucrat capitalism in the form of cronyism has become more pronounced under the US-GMA regime. These cronies, such as Mike Defensor and Enrique Razon, have partnered with big foreign businesses to corner government contracts, investment deals, and privatization projects.

Immediate relief and long-term reforms

The immediate challenge today is to assert for urgent economic relief and policy reforms that will at the minimum address the further deterioration of the state of the domestic economy and the people. With increased uncertainties in the global economy, the key is to promote internal drivers of growth, increase domestic consumption, and in the process invigorate domestic production. This can be achieved through substantial reduction in and effective control of the prices of basic goods and services that the people consume. The 12% VAT and other onerous taxes must be scrapped and proposals for additional burdensome taxes must be vehemently opposed. Neoliberal policies that have allowed global and local cartels to abuse the people with exorbitant prices must be opposed such as the ODL, EPIRA, and ongoing, gradual privatization of the NFA and implement state regulation and increased intervention.

Complementing these efforts to bring down prices and keep them in check is the implementation of a substantial wage hike that will allow millions of poor families to at least lessen the disparity between the cost of living and their daily incomes. Filipino small and medium enterprises (SMEs) must be supported and protected by the government not only to allow them to substantially increase their workers’ wages but also to help them cope with the raging global and local crises.

Domestic resources must be freed up and public investment in social and economic services urgently needed by the marginalized sectors must be significantly increased. This entails the repeal of automatic debt servicing, the cancellation of odious debt, and a big cutback in military spending so that enough resources will be immediately made available for social services such as education, health, and housing. More taxes must be collected from big business, especially the TNCs operating in the country and reverse the trend of declining tariffs on international trade.

The domestic economy and local industries must be protected. The implementation of the JPEPA should be stopped and all means must be exhausted to abolish the treaty. Ongoing FTA negotiations must be opposed, including the concession of additional liberalization commitments in the WTO especially on agriculture and non-agricultural market access. New efforts aimed at more trade and investment liberalization such as through Cha-cha must be decisively derailed.

Finally, the latest flare-up in the periodic crisis of monopoly capitalism and its consequent impact on the weak and pre-industrial domestic economy have made it more imperative to create the material conditions that will allow the economy to break free from its permanent crisis of backwardness and poverty. This necessitates the implementation of a genuine agrarian reform program to encourage the productivity of Filipino farmers and farm workers, who comprise a great majority of the direct producers of wealth in the economy. This will allow agriculture to create the needed economic surplus for industrial development and widen industrial production as it boosts domestic consumption in the countryside where an overwhelming majority of poor and exploited Filipinos live. (END)

Obliterate

farmer1Explaining her “no” vote to the Joint Resolution on CARP (Comprehensive Agrarian Reform Program) extension, Representative Risa Hontiveros of the pseudo-progressive party-list Akbayan said that Congress has “managed to obliterate an entire class” with the approval of the said resolution. Obliterate means “wipe out”, “eliminate” or “annihilate”. I wonder how a single act of Congress can wipe out, eliminate or annihilate the entire Filipino peasantry, which for almost four decades now, has been waging a civil war in the countryside to implement genuine agrarian reform.

As if her advocacy of CARP extension with reforms is the be all and end all of the peasants’ fight for land, Hontiveros has reduced the class struggle for effective control of land between peasants and landlords in the cozy confines of the House of Representatives. The Joint Resolution may have set back the peasants’ struggle for genuine agrarian reform in the parliamentary arena, not a surprise in landlords’ turf. But it certainly did not reverse the victories achieved by the peasants’ direct political actions in the countryside to own the land the till. Or will it hinder future triumphs of their agrarian revolution.

As the Bagong Alyansang Makabayan (Bayan) said in its recent statement, “The legislative arena is just one field of struggle by farmers and advocates of genuine agrarian reform. Indeed, the battleground is far wider than the halls of a landlord-dominated Congress. It is in the remotest barangays in the countryside where farmers and farm workers should collectively struggle against oppression and exploitation that stem from landlord domination.

I can assure Hontiveros that the Filipino peasantry will not be wiped out, eliminated nor annihilated any time soon. Heck, they were not obliterated by the political killings and state terrorism by GMA and her armed forces. And no matter what this brazenly anti-people regime does, it could never kill and obliterate an aspiration.

What is certain is that the latest developments in CARP, combined with state repression, Cha-cha, and worsening poverty and hunger, will further fuel agrarian unrest and social discontent. CARP’s extension has only further exposed the rottenness of Congress, and in the process convinced a growing number of tillers that a strong peasants’ and people’s movement is the greatest hope for genuine agrarian reform in the country.

A poem for IBON

IBON's 30th anniversary logo

Last night, IBON had a solidarity dinner with friends and former staff as part of their 30th anniversary year-long celebrations. I was with IBON for almost 10 of those years. Below is a poem i wrote and read for them last night. It’s also my little way of thanking the institution that has patiently taught me a lot. Mabuhay ang IBON at sa susunod pang tatlumpung taon!

 

 

tatlumpung taon ka na, ano nga bang ibon ka?

hindi ikaw ang maalamat na phoenix
ng nagliliyab na balahibo at pakpak
na nagsaboy ng nagpupuyos na apoy
at naghasik ng nakasisilaw na liwanag

bagkus isa ka lamang din sa maraming inakay
na napisa sa pugad ng mga gabing hindi tahimik.

hindi ka dumating na tulad ng ibong mandaragit
matang mabangis, kukong matalim
gayunman ang tuka mo’y sintatag at sintalas
ng sa agilang pumupunit sa kalamnan ng bawat
kasinungalingang ipinambubulag
sa bayang minangmang ng karukhaan

ang mga paglusong mo’y sintiyak ng sa lawing
masusing pinag-aralan ang mga hakbang
nilang tagapaglubid ng inimbentong pag-unlad,
nilang tagapagtakip ng katotohanan.

lalong hindi ka rin ang maamong kalapating
nag-iipit sa tuka ng kapayapaang
bulag sa inhustisya, bingi sa pagdaing, pipi sa pagtutol

ngunit ang siyap mo’y madamdaming paghuni
ng tula ng mga api, umaawit ng kanilang kabiguan
ng kanilang pag-asa, ng kanilang tagumpay

ang himig mo’y hindi sa adarnang oyayi sa paghimbing
ang sa iyo’y malakas na kakak ng pagbangon at paggising

loro kang ang dila’y matabil, sa palalo’y sumusugat,
sa hamak ay magiliw.

hindi ikaw ang langay-langayang palayong lumutang sa sta. filomena
hindi ikaw ang ibong umiiyak nang ikulong sa hawla…

tatlumpung taon ka na, ano nga bang ibon ka?

 sa presidenteng maton ikaw ay ipot,
 sa presidenteng peke ikaw ay komunista
 ha! hayaang umipot pa nang umipot
 ang laksa-laksang kawan ng pipit at maya!

Disyembre 15, 2008
Para sa ika-30 anibersaryo ng IBON Foundation Inc.

Senate railroaded JPEPA, who’s surprised?

Voting 16-4, the Senate has railroaded Wednesday night the ratification of the JPEPA. The wicked scheme of Malacanang, Miriam Santiago and Mar Roxas was swift and was over in a matter of less than three hours. At 8:30pm, I received a text message from a Senate staff: “Nagbibilangan na dito. Gusto nila ipasa JPEPA tonight”. And at around 10:58pm, another text message came: “JPEPA has been approved on third reading. Pimentel, Aguino, Escudero and Madrigal voted no”.

The events that transpired at the Senate on Wednesday night, however, is not really surprising anymore. From the start, JPEPA has been shrouded in secrecy – it was negotiated by Malacanang away from public eye.  It was signed by GMA on the sidelines of a major international event in Finland. Civil society groups had to petition the Supreme Court just to force Malacanang to make public important documents about the JPEPA (which unfortunately the SC turned down, setting the precedent for more undemocratic and non-transparent negotiations on economic treaties in the future – at our expense, of course) That it was ratified by the Senate while the rest of the country is asleep is only a fitting conclusion to an agreement that has been kept away from public scrutiny.

This is not the first time that Congress, with apparent pressure from Malacanang and powerful lobby groups, has rushed the approval of an unpopular measure or initiative in the dead of the night. From impeachment complaints against GMA, to EPIRA and VAT, and now the JPEPA, legislators and Malacanang have the propensity to cloak their wicked plans against the Filipino people in the darkness of the night.

The press releases from Malacanang and JPEPA’s main proponents today are loaded with the expected sound bites. GMA was quoted as saying that the JPEPA will protect the country from the onslaught of the global economic recession – I guess GMA must hire new speech and PR writers to come up with more interesting and fresh sound bites, this is exactly what she has been saying to justify the VAT. Miriam, for her part, is denying that they railroaded the JPEPA. Inisahan na tayo, ginagawa pa tayong tanga.

But the fight is not yet over. One option is to file a petition before the Supreme Court to question the constitutionality of the JPEPA. Legal luminaries like former SC justice Feliciano, Prof. Dean Magallona and Prof. Harry Roque, among others have pointed out the constitutional defects of the treaty such as its provisions on foreign ownership and investment. We can pursue this option to stop JPEPA’s implementation. But like all government institutions, we can only expect a favorable ruling from the Supreme Court if we have a strong mass movement that will exert political pressure to defend the country’s patrimony and sovereignty.

How much is a substantial, one-time oil price rollback? At least P7 for diesel

Since August, media reports listed about nine rounds of oil price rollbacks that have pulled down pump prices of gasoline products by P10.50 per liter and kerosene and diesel prices by P8.50. Prior to the series of oil price rollbacks since August, the last monitored round of price reduction was reported on July 21, a week before the annual State of the Nation Address (SONA) of Ms. Gloria Arroyo.

But the rollback covered only the price of diesel and was implemented three days after oil companies implemented a P3 per liter increase, the single biggest fuel price hike recorded. (See Table)

What has caught public attention in the latest rounds of rollbacks is the noticeably larger reductions that small player Unioil has implemented. While its competitors, including the Big Three, have reduced their pump prices by a total of P3 per liter last Sep 11 and 18, Unioil implemented a total rollback of P6 per liter for its gasoline products and P4 for its diesel and kerosene.

The oil firm explained that it “will always reflect true prices based on market forces, supply and world oil prices for the ultimate benefit of the consuming public”. Unioil also said that higher price reductions will also significantly boost its sales.

There is a general consensus that the rollbacks in local pump prices have not been proportionate to the rapid decline in world oil prices with the Big Three taking the brunt of public criticism. Malacañang has not only publicly questioned the obvious gap in global and local price movements but even called for an “independent” audit of the Big Three through the Department of Justice (DOJ).

The audit team shall be headed by the dean of the College of Accountancy of the University of the Philippines (UP) with certified public accountants from the DOJ, Department of Energy (DOE) and Department of Trade and Industry (DTI) as members.

Meanwhile, Senate majority floor leader Francis Pangilinan has asked the public to boycott the Big Three as “one way of sending a message to the big companies to be sensitive to the plight of consumers” and for “their ‘obvious collusion’ to delay the lowering of oil prices”.

However, calling for an independent audit of the oil firms may prove futile. This is not the first time that the government has ordered an audit of the oil companies by an “independent” body. The most recent was a DOE-commissioned study done by Peter Lee U, economics dean of the University of Asia and the Pacific (UA&P).

The audit covered Petron and Shell, which together control some 70% of the local market and was verified by the SGV Co. Conducted amid the weekly oil price hikes in the second quarter of the year, it found out that supposedly “the oil firms have been reasonable in their increases”.

The basic problem with the government-initiated audits of oil firms is that they fail to look at the more important aspects of the industry that could help determine whether oil price levels and adjustments are reasonable or not. This is not simply because the audit teams may be incompetent but because under deregulation, oil firms could not be compelled to disclose certain aspects of their business operation in the spirit of “confidentiality and competition”.

The demand for a substantial rollback that will truly reflect rapidly declining global prices, on the other hand, enjoys wide public support including from the mainstream media. The obviously big disparity in the price levels of local pump prices relative to global prices have put the oil companies on the defensive. As of September 26, the monthly average of Dubai crude is pegged at $96.49 per barrel, which is about the same level of its March average of $96.76.

Meanwhile, as of September 26, the average pump price of unleaded gasoline is about P52.21 per liter while that of diesel is around P51.19. In March, their respective averages were P45.33 and P38.31 or a difference of more than P9 per liter for unleaded gasoline and almost P15 for diesel. But note also that the peso has lost P3.87 of its value against the US dollar between March and September.

Thus, factoring in both the estimated impact of Dubai crude and foreign exchange (forex) adjustments during in March and September, prices should still be rolled back by about P3.10 per liter for unleaded gasoline and P9.10 for diesel for September prices to approximate the price levels in March. (See Table)

However, such approach still does not consider the monthly changes in Dubai crude and foreign exchange in other months from January to September. Oil firms may use this as a justification for their pricing behavior because they may claim under-recoveries in certain months which they say the need to recoup.

Thus, computing the estimated net effect of the monthly movement in Dubai crude and forex on pump prices could be the more accurate approach in estimating the ideal oil price rollback. Simulating the “rule of thumb” used by Petron in determining the impact of monthly changes in Dubai crude and forex on local pump prices and comparing them with the actual price adjustments per month as reported by the DOE, it appears that diesel prices are “overpriced” by P7.21 per liter; kerosene, P8.25; and gasoline products by P2.21 to 2.23.

Based on these estimates, it also appears that oil firms have collected most of their “overpricing” in July and August that offset their “under-recoveries” from February to May. (See Table)

This means that oil companies have implemented oil price hikes than what the adjustments in Dubai crude and forex warrant from January to September. A major limitation of this estimate is that it does not factor in the impact of speculation and monopoly pricing by the oil TNCs and in fact assume that global spot prices reflect the true cost of oil (which in reality is not the case).

Another limitation is that it uses only Dubai crude as benchmark, while oil firms claim that they also use the MOPS as benchmark in computing pump prices for their imported finished petroleum products.

While it does not use the MOPS, it can still be argued that the pump prices of imported finished products is nonetheless traceable to the price of crude oil.

It is unlikely that oil companies will implement another round of rollbacks in September which means that diesel will be overpriced by about P7.21 a liter, etc as of September. (Note that these amounts may vary a little once the full-September average of Dubai crude and forex become available.)

They should be compelled to rollback prices by these amounts if only to offset their “overpricing” from January to September, on top of whatever price adjustments that they will implement in October and beyond.

Sources

  1. “Unioil cuts fuel prices by P2-3/L” by Abigail L. Ho, Philippine Daily Inquirer, September 19, 2008
  2. “DOJ pushes independent audit of oil firms” by Tetch Torres, INQUIRER.net, September 9, 2008
  3. “Pangilinan backs calls to boycott 3 big oil firms” by Edson C. Tandoc Jr., Philippine Daily Inquirer, September 4, 2008; “Boycott of ‘Big 3’ oil firms urged” by Maila Ager, INQUIRER.net, September 18, 2008
  4. “Audit finds nothing wrong in oil firms’ fuel price hikes”, Business World, June 5, 2008