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Thursday, April 21, 2005
Editorial: Pesky, volatile oil prices
The problem is, when the price of crude oil moves upward in the world market, the country’s processors of crude are quick to increase the pump price of gasoline and other products, like cooking gas. Yet, when the price of crude goes down in the world market, the effects are not
quite as easily felt in the gasoline stations of the nation.
This is the unfairness our motorists and housewives complain of.
Still, if one comes down to it and really nitpick on our oil products’ dilemma, one would invariably be confronted with a situation that borders on the ridiculous, if the reality were not gloomy and depressing.
With the oil companies imposing at will frequent increases in prices of oil products, it should not surprise anyone that the same groups that sought to deregulate the oil industry a decade ago are now also seeking the return of regulation.
At that time, the government had devised a way of protecting the consuming public from the impact of oil price increases at anytime that this occurred.
Rather than have the margin of increased price passed on to the consumers, particularly in the transportation industry, government created a contingent fund that would cover the margin of increase and passed it on to the oil companies to cushion their potential losses.
That strategy was part of government’s oil regulation policy. It was an effective way of protecting the mass of oil consumers from the dire effect of runaway pump prices of gasoline, cooking gas, and other oil products.
But the oil regulation policy became the target of protests from the radical left and other cause-oriented groups in the belief that the contingent fund was used to line the pockets of some high public officials.
Finally, towards the close of the administration of then president Fidel Ramos, the oil deregulation program came into being.
With it, the hope was that gasoline prices would stabilize as the companies are given the freedom to impose new prices as they see fit, in keeping with the market forces-driven supply of global oil.
Little did anyone foresee that many years later, the deregulated oil industry would place a stranglehold on the country’s oil consumers.
And so now, there are those who see the policy as obscene and want it scrapped, noting that the oil firms are operating as a cartel.
But this is precisely the problem the consumers face: how to make the oil companies sensitively react to the market forces, and where the price is beneficial to consumers, immediately reduce the pump prices.
Otherwise, the cry against the deregulated oil industry would continue to rise in stunning crescendo until the only way out would be to repeat what has become part of history.
(April 21, 2005 issue)
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