Oil firms, government earn almost PHP10 M daily extra income from unjustified price hikes

These guesstimates merely scratch the surface by comparing local and international price changes. In reality, with or without price adjustments, big oil companies that run and control the global oil industry retail petroleum at prices many times their actual production costs.

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(Photo from Inquirer.net)

Taking advantage of deregulation, it appears that oil companies continue their abusive practice of implementing oil price hikes that are bigger than what the world market supposedly warrants. This allows them to pocket extra profits on top of their regular net income, as the government also reaps windfall tax revenues at the expense of consumers.

Looking at local oil price movement from the start of the year up to the third week of March, the price adjustments in diesel may have been overpriced by 24 centavos per liter and gasoline by 15 centavos per liter. This resulted in about PHP9.67 million additional collections every day from diesel and gasoline products for the oil companies. Of this amount, PHP1.16 million daily go to the Duterte government’s value-added tax (VAT) collections. (Note that the administration has also been collecting additional excise taxes from oil products this year under the Tax Reform for Acceleration and Inclusion or TRAIN law.)

The Department of Energy (DOE) and the oil companies explain that domestic price adjustments merely reflect the movement in global oil prices plus the fluctuations in the foreign exchange (forex). For the Philippines, the international benchmark for refined petroleum products is the Mean of Platts Singapore (MOPS). Since the country’s oil industry was deregulated more than two decades ago, these adjustments have been automatic.

But based on the weekly MOPS adjustments and forex fluctuations as posted in the DOE website, the price adjustment in diesel for the year should have only been around PHP1.31 per liter (as of March 20) while the actual net price hike reached PHP1.55 during the period. The same thing is true for gasoline which posted a net increase of PHP1.05 per liter when the adjustment should have only been about 90 centavos per liter.

The process of estimating the price adjustment is pretty straightforward. Oil companies claim that price adjustments for the present week is determined by MOPS price adjustments (expressed in US dollars per barrel) and the average forex in the past week. For instance, if last week the MOPS diesel increased by US$2 per barrel with the forex pegged at PHP50 per dollar, how much should the price hike be in local diesel prices for the current week?

Step 1 is to convert the MOPS price adjustment into PHP per barrel. So, US$2 x PHP50 = PHP100 per barrel.

Step 2 is to convert the MOPS price adjustment into PHP per liter. One barrel has 158.99 liters. So, PHP100 / 158.99 = PHP0.63 per liter.

Step 3 is to include the 12% VAT to get the final estimated adjustment. So, PHP0.63 x 1.12 = PHP0.70 per liter.

Thus, a US$2-per barrel increase in MOPS diesel at PHP50 forex rate in the previous week translates to a 70-centavo price hike in the domestic price of diesel in the current week. Anything above 70 centavos is “overpricing”.

It is important to stress that the “overpricing” based on the MOPS and forex movements does not in any way represent the true extent of how much prices are artificially bloated due to the monopoly control of big oil companies in the global and local markets. It just illustrates how deregulation can be easily abused by the oil firms operating in the country through implementing adjustments that are beyond the supposedly “justified” amounts by so-called international benchmarks such as the MOPS.

With the Philippines being one of the world’s most oil intensive economies, even the several centavos that oil companies overcharge through questionable price adjustments already translate to massive extra profits for the oil industry.

Using domestic consumption data as of the first half of 2017 from the DOE, oil firms are earning (excluding the VAT, which goes to the government) an estimated PHP6.25 million daily in extra profits from diesel and PHP2.26 million daily from gasoline. These are derived at by multiplying the 24-centavo estimated overpricing in diesel by the diesel consumption of about 29.34 million liters daily; and the 15-centavo estimated overpricing in gasoline by the gasoline consumption of around 16.66 million liters daily.

Based on market share (as of first half 2017, based on DOE report), the Big Three which continues to dominate the local market after more than two decades of deregulation, cornered 56% of the estimated daily extra profits of the oil firms – Petron, PHP2.43 million daily; Shell PHP1.76 million; and Chevron PHP0.56 million.

Again, these guesstimates merely scratch the surface by comparing local and international price changes. In reality, with or without price adjustments, big oil companies that run and control the global oil industry – from the vast oil fields in the Middle East all the way to your neighborhood gas stations, and all the technology and infrastructure that keep this massive network together – retail petroleum at prices many times their actual production costs.

To illustrate, the Philippines imports 79% of its crude oil from just three countries – Saudi Arabia, 35%; UAE, 28%; and Kuwait, 16% (as of first half 2017, according to the DOE). The production costs of crude oil in these countries, based on 2015 data (as cited by CNN Money), are just US$9.90 per barrel for Saudi Arabia; US$12.30 for UAE; and US$8.50 for Kuwait.

Yet, in 2015, Philippine domestic prices were based on the posted price of around US$51.23 per barrel (2015 average posted price of Dubai crude, based on International Monetary Fund or IMF monitoring). This means that oil firms in the Philippines pegged pump prices at crude oil prices that are about four to six times the actual production costs.

Under deregulation, the government has abandoned its responsibility to determine if domestic oil prices – whether in terms of price adjustments based on global prices or more importantly, in terms of reasonable prices based on production costs – are justified or not. The public’s burden is aggravated more by price speculation in the global oil market that further artificially drives up local prices which consumers fully bear because of deregulation. #

 

Bangis ng buwis sa langis

Sabi dati, “matira matibay”. Pero sa ilalim ni Digong at ng kanyang mabangis na buwis sa langis, “matira mayaman”.

Alam ba ninyong mula nang i-deregulate ang industriya ng langis sa bansa at patawan ng mga dagdag na buwis, apat hanggang limang ulit na mas mabilis ang pagtaas ng presyo ng diesel at gasolina kumpara sa bilis ng pagtaas ng minimum wage ng mga manggagawa?

Pero para kay President Duterte at mga alipores n’yang neoliberal, hindi pa sapat ang kalbaryong ito ng mamamayan.

Dobleng-dagok pa ang hinaharap natin ngayong linggo sa taas-presyo ng mga produktong petrolyo.

Unang dagok – muling nagtaas ng presyo ang mga kumpanya ng langis dahil pa rin daw sa galaw ng presyo sa world market. Sa lumabas na report sa media, nasa 80 centavos per liter ang OPH (oil price hike) sa gasolina, 55 centavos sa diesel, at 55 centavos sa kerosene.

Deregulated ang industriya ng langis sa bansa. Awtomatiko ang pagbabago sa presyo linggo-linggo sa mga gasolinahan para raw i-reflect ang galaw ng presyo sa world market. Ito ang ikatlong sunod na linggo ng OPH sa pagsisimula ng “ma-Digong bagong” taon natin.

Pangalawang dagok – inaasahang ipatutupad na ngayong linggo ang excise tax sa langis sa ilalim ng TRAIN (Tax Reform for Acceleration and Inclusion). Sa naunang pahayag ng DOE (Department of Energy), nasa Php2.97 per liter ang OPH sa gasolina, Php2.80 sa diesel, at Php3.30 sa kerosene – kasama ang 12% VAT (value-added tax).

Ibig sabihin, aabot ang big time OPH sa Php3.77 per liter sa gasolina; Php3.35 sa diesel; at Php3.85 sa kerosene sa pinagsamang impact ng TRAIN at deregulasyon.

Kung tutuusin, doble ang kubra ng gobyerno sa langis dahil sa TRAIN. Pasok sa kwenta ng VAT sa presyo ng langis ang excise tax (at iba pang buwis) sa iniimport na petrolyo. Dahil itataas ng TRAIN ang excise tax, tataas din ang koleksyon mula sa VAT sa langis. Syempre pa, lahat ng ito ay papasanin ng publiko.

Napakabigat nito lalo na para sa mahihirap nating kababayan na direktang tatamaan ang kabuhayan. Halimbawa, sa isang iglap, ang gastos sa langis ng isang tsuper ng jeep ay lolobo nang lampas Php100 sa maghapong pasada (batay sa konsumo na 30 liters ng diesel). Ang gastos ng mangingisda sa balikang byahe sa laot ay tataas nang halos Php38 (sa konsumo na 10 liters ng gasolina).

Pambili na sana ito ng isa hanggang tatlong kilo ng bigas (Php27 per kilo na regular NFA rice o Php37 na regular commercial rice) pero kukunin pa ng gobyerno sa mga pamilyang hindi na nga halos makahinga sa pagsisikip ng sinturon.

Pero ang bad news pa, karugtong ng OPH ang pagtaas ng iba pang bayarin. Sa leeg na yata ng mahihirap gustong ilagay ng pamahalaan ang pinahigpit na sinturon. Samantala, ang mga super yaman, may discount pa para sa kanilang luho sa ilalim ng TRAIN.

Bago pa ang TRAIN ni Digong, matagal na tayong pinahihirapan ng deregulasyon at ng buwis sa langis. Nagsimula ang deregulasyon noong 1996. Kung ikukumpara ang kanilang real prices (adjusted for inflation) ngayon at noong simula ng deregulasyon, lampas-doble na ang presyo ng gasolina at diesel.

Ang estimated increase ng real price ng diesel sa pagitan ng 1996 at 2018 ay nasa 131% habang sa gasolina naman ay 118 percent. Sa parehong panahon, ang real wage ng mga minimum na sahurang manggagawa sa Metro Manila ay lumaki lamang ng 27 percent.

Pumatong sa halos lingguhang OPH sa deregulasyon ang mga pabigat na buwis gaya ng naunang excise tax na ipinataw sa mga produktong petrolyo noong 1996; ang 12% VAT (value-added tax) noong 2005; at ngayong taon, itong dagdag na excise tax dahil sa TRAIN. (Tingnan ang chart sa taas)

Sabi dati, “matira matibay”. Pero sa ilalim ni Digong at ng kanyang mabangis na buwis sa langis, “matira mayaman”. #

Join “people power” vs. high oil prices and Noynoying, join CAOPI

The media called it People Power against oil price hikes. And maybe it is, considering how the issue of very high oil prices has united various groups from a wide political spectrum. From militant labor and transport to businessmen, from progressive lawmakers to the more traditional legislators, from Church leaders to the radical youth, from civil society to national democratic organizations. Looking at the lineup of the convenors and supporters behind the Coalition Against Oil Price Increases (CAOPI), one would get a sense of broadness that could resemble those of the movements which toppled two regimes.

Broad coalition

CAOPI was launched last Monday (March 26) in a press conference at the UP campus in Diliman. Convenors and supporters who were present include the progressive bloc in Congress led by partylist representatives Teddy Casiño of Bayan Muna, Ka Paeng Mariano of Anakpawis, and Raymond Palatino of Kabataan; Zambales Rep. Mitos Magsaysay, one of the most vocal critics of the Aquino administration;  former legislator and now publisher Jacinto Paras; Marikina City councilor Jojo Banzon; Alliance of Concerned Truck Owners and Operators (ACTOO) President Ricky Papa; a representative of National Economic Protectionism Association (NEPA) President Bayan dela Cruz; UP Professor and VP for Public Affairs Danny Arao; Anti-Trapo Movement President Leon Peralta; Francis Mariazeta III, a barangay chairman in Manila; and think tank IBON Foundation Executive Director Sonny Africa. They were joined by national leaders of organizations under the multisectoral Bagong Alyansang Makabayan (Bayan), including militant labor Kilusang Mayo Uno (KMU), transport group Piston, fisherfolk group Pamalakaya, urban poor group Kadamay, women’s group Gabriela, youth groups Anakbayan and National Union of Students of the Philippines (NUSP).

Other personalities who joined the coalition or expressed support but were not present during the launch are Novaliches Bishop Emeritus Teodoro Bacani, Philippine Chamber of Commerce and Industry’s (PCCI) Donald Dee, National Council for Commuter Protection (NCCP) President Elvira Medina, and Manila City Councilor DJ Bagatsing. CAOPI convenors also include members of the Catholic and Protestant clergy, union presidents of the some of the country’s largest companies, as well as student councils of several universities in Metro Manila. (Download the initial list of CAOPI’s convenors and supporters here)

Inaction, crime against the people, too

CAOPI is not calling for the ouster of the Aquino administration. Its raison d’etre is fairly modest – that is for the President to recognize the worsening problem of high oil prices and concretely do something to address it. In its unity statement, the people and groups behind CAOPI said that they are “alarmed and enraged by the inaction of President Benigno Aquino III amid the spate of oil price increases.” The coalition demands that “government immediately intervene to stop the unreasonable oil price hikes, bring down the prices of petroleum products, and control oil prices.”

Edwin Lacierda, Aquino’s arrogant spokesman, as expected dismissed the newly-formed group, insisting that government is addressing the problem. “Kung ayaw n’yong makinig, ano’ng magagawa namin? Kung ayaw nilang maniwala, ano’ng magagawa namin?”

But the simplicity of its message and the concreteness and more importantly, the legitimacy of its demands – amid escalating fuel prices and popular perception of Noynoying – give CAOPI the vast potential to steadily grow and persist, yes, like People Power. Not even the vaunted high popularity rating of Aquino will endure the groundswell of protests and social unrest if government will continue to ignore the problem and insist on its problematic policies like the Oil Deregulation Law and the 12% value added tax (VAT). Note that surveys also show the deteriorating public perception on Aquino’s inaction on high oil prices (for instance, read here).

The Yellow crowd may argue that it is baseless to invoke People Power against Aquino because unlike Marcos and Erap, he is not corrupt. In fact, he is going after Gloria Arroyo, Renato Corona, and their cohorts in plundering the nation. These people are plunderers and they should be punished (although it remains to be seen if Aquino will go all the way in punishing their corruption even if it means undermining the status quo that serves the political elite like Aquino). But going after Arroyo while tolerating and legitimizing the bigger plunderers like the foreign oil companies and their local partners is also a crime against the people. Insisting on collecting the VAT on oil at the great expense of the people is a crime as grave as, if not worse than, collecting tongpats from government projects.

Just and legitimate

CAOPI’s demands and proposals are just and resonate the sentiments of our people. It said that the Aquino administration’s excuse that it is helpless amid escalating fuel prices is unacceptable as it argued that concrete steps can be immediately taken such as: Imposing a moratorium on more oil price hikes, which it said the President can do due to the extraordinary situation of high oil prices undermining public and national interests; immediately bringing down oil prices by removing, suspending or reducing the regressive VAT on petroleum products; and addressing overpricing by oil companies and regulating local prices by and repealing the oppressive Oil Deregulation Law. It challenged President Aquino to exercise political will and implement these reforms to protect the interest of ordinary consumers and the domestic economy. (Download the CAOPI unity statement here)

The group is not asking the people to swamp Edsa to pressure the President to take decisive, pro-people steps against high oil prices, well not yet. But it is asking the public to participate in a series of actions that will force Aquino to listen and do something, beginning with a coordinated noise barrage on March 30. CAOPI declared that it will continue to pressure Aquino and the entire government until they address the urgent problem of excessive oil prices.

Join CAOPI

No group, including the Aquino clique, has a monopoly over People Power, which in its simplest form is about the people asserting its sovereign power to determine which policies best serve their welfare and interests. In demanding that Aquino reverse its position on the VAT and the Oil Deregulation Law and mobilizing the broadest support possible, CAOPI is indeed exercising People Power.

If you wish to become a member or supporter of CAOPI, you may contact its Secretariat at caopi.secretariat@gmail.com and include your name in its Unity Statement. You may also visit the website of Bayan (www.bayan.org) for updates and more information. #