Tuesday, October 14, 2008 Malig: Complicated computation? By Jun A. Malig Cognition
IF MULTINATIONAL oil companies operating in the country are to be asked, ordinary people won't understand the "complicated formula" involved in the pricing of gasoline and diesel -- the fuels that directly affect the prices of basic goods and services.
They said "market forces" also affect pricing and that fluctuations in the prices of oil in the world market should first be "studied."
Understandably, the oil companies won't want us to understand how they price their products. But over the weekend, Executive Secretary Eduardo Ermita said even President Gloria Macapagal-Arroyo had been dismayed over the turtle-paced reduction in fuel prices.
The same sentiment was expressed by a number of lawmakers. But Ermita said the government could not compel oil companies to reduce the prices of their products due to the existing Oil Deregulation Law (Republic Act (RA) 8479).
So what needs to be done? Obviously, as government officials have explained, it's the Oil Deregulation Law that enables oil companies to set their own pricing schemes based on "complicated formula" which deviates from the actual market movements.
What is unclear to ordinary folks is the fact that there is no substantial executive or legislative effort to amend the law. If RA 8479 is being used by the oil companies to keep their unreasonable pump prices and as a shield against criticisms from Malacañang, the Congress and the general public, the law must be amended.
If a decayed tooth is causing you discomfort and pain and adversely affects your daily activities, have it patched up or extracted if necessary. Unless, of course, you want your entire body to continue feeling the pain caused by the tooth decay.
Should we fear the possible pullout from the country of some oil companies if the Law Deregulation Law is amended or repealed? I don't think so. Giant multinational oil firms like Shell and Caltex (Chevron) have been around for decades, making billions of pesos in net profits with or without the said law.
What if smaller players decide to leave? Well, Taiwan has only two oil companies serving the whole country -- a state-owned and another owned by a private Taiwanese corporation -- and its economy and his people are in a lot better shape.
The Energy Information Administration in the United States offers transparent information to the public how the pump prices of gasoline and diesel is being computed. It doesn't involve complicated geometric or trigonometric formula. Even ordinary men and women can understand it. Graphical and visual images make it simpler to comprehend.
Why does the US government need to do this? Because the public demands and deserves transparency. And the people have to know what they pay for in every gallon of gasoline or diesel they purchase. Printer-friendly primers on fuel prices are even offered for free download.
It was made clear to the Americans that for every gallon of regular gasoline they purchase, for instance, 64 percent go to crude oil purchase, 14 percent to distribution and marketing, 11 percent to state and federal taxes, and 11 percent to refining costs and profits.
The primers also explain the fluctuating retail prices of gasoline and diesel as they are affected by crude oil prices, supply and demand, and retail station competition.
Every time there's fuel pump prices adjustment, the reasons and factors involved are transparently presented to the public in detailed and well-explained manner.
Now, if they can do that in the US, why can't we do the same in our country? I guess we already know the answer.
