The Three Gs: Gas, Greed, and Government
The price of petroleum products continues to rise and this has adversely affected the general public’s way of life. What is the government doing to alleviate the struggles of the everyday Filipino?
by Angela Porciuncula
The prices of basic necessities are on the rise. Local fuel costs are nearing the ₱100 per liter mark while the government continues to pin the blame on convenient scapegoats. The Russia-Ukraine War, for instance, was an ideal candidate to blame for the crisis. However, former DFA Secretary Teddy Locsin rebutted this, saying that the country sourced its oil elsewhere, not Russia. The hefty increments in gas prices, he said, were due to raw greed.
The Greed of Gas Companies
The Philippines has faced continuous oil price hikes even before the Russia-Ukraine war. This begs the question: Who, then, is truly to blame?
As established earlier, it is not a who, but a what: corporate greed. While the public transportation sector and the general commuting public gruel over an ₱86 per liter price point for petroleum products, oil companies seem to be doing just fine. According to a study by the Department of Energy (DoE), players in the industry make a killing by maintaining high-profit margins: 15% on diesel, 19% on gasoline, 22% on kerosene, and 41% on LPG. Imagine, for every liter of gasoline, a profit of roughly ₱16 goes straight into the coffers of oil firms. The DoE attempted to investigate these inordinate profit margins back in 2019, asking oil companies to disclose the components of their pump prices. Disappointingly, this case did not hold on for long, as the Court of Appeals issued an injunction against the investigation. With this, we cannot help but wonder: Just what are these companies hiding?
Poor Policies and Government Inaction
Inflation is not fueled by greed alone. The government is just as responsible due to its imposition of excessive value-added and excise taxes during the crisis. Currently, there is a 12% VAT placed on petroleum products on top of a flat rate excise tax prompted by the Duterte administration’s TRAIN Law.
Another policy that is largely responsible for the hefty increments in the prices of petroleum products is the Oil Deregulation Law, enacted by the Ramos administration in 1998. It had the goal of creating a free market for oil companies in the country — ala “invisible hand.” It hoped for efficiency in the industry, but unfortunately, decades later, no tangible benefit can be reaped from the law.
Because the government relinquished its authority to control the industry’s prices, oil price hikes were automatically approved without any explanation. The “free competition” that the government hoped for never happened. Petron Corporation, once government-controlled but now owned by Ramon Ang, and new players such as Phoenix Petroleum, naturally gravitated toward greed, as the deregulated market allowed for the firms’ huge incomes. It is undeniable that the industry is saturated by private ownership.
As of now, the government only owns 10% of the Malampaya Gas and Petroleum Field — one of the country’s most important energy sources. Dennis Uy’s Udenna Corporation, on the other hand, owns 45% of Malampaya. Adding insult to injury is the cartel-like control of private firms over the country’s oil market, with Petron and Shell having the highest share in sales at 24.88% and 18.25% respectively
Plans and Suggestions for the Current Administration
As the public is increasingly affected by nonstop oil price hikes, the question in everyone’s mind is: What’s next?
Undoubtedly, there will be stronger public demand for price rollbacks, but for these calls to materialize, the government must stop looking for scapegoats; the Russia-Ukraine War narrative has to stop. Perhaps President Bongbong Marcos can take a page from his father’s regime. In the 1980s, the dictator Ferdinand Marcos Sr. proposed the establishment of the Oil Price Stabilization Fund (OPSP). Will Marcos Jr. take a similar route, or will he attempt to convince the oil industry’s biggest players to dampen their greed?
As of press time, Malacañang is yet to present a plan to respond to the crisis at hand. However, several individuals like neophyte senator Robinhood Padilla, former senatorial candidate Atty. Neri Colmenares, and former vice president Leni Robredo, have all come forward with proposed solutions.
Colmenares offered five ways to mitigate the effects of the oil price crisis, starting with the immediate repeal of excise taxes and VAT. According to him, doing away with VAT on fuel can provide an average relief of ₱27 per liter. His other solutions touch on the greed of oil companies as he calls for the unbundling of oil prices and the repeal of the Oil Deregulation Law. Colmenares reasoned that the former will push for transparency in the pricing of petroleum products as oil companies will be mandated to present breakdowns to the government. The latter, on the other hand, will ensure that the government will be able to enact a framework that can properly control the pricing of oil products.
His fourth solution is to buy back Petron. This is a logical move as Ramon Ang has expressed interest in selling the company, but only on the condition that it must be the government who will buy the firm. Lastly, he proposed the establishment of the National Petroleum Exchange Corporation. This government-owned corporation will enter the market as a competitor and will play an important role as the central importer and distributor of petroleum products. Colmenares’ final proposal is slightly similar to the idea of Padilla, as the latter proposed the establishment of a ‘national gas station.’ The said gas station will cater to public utility vehicles only, and Padilla claimed that this solution will lead to lower fuel prices and assistance to the transportation sector. The senator, however, failed to elaborate on how he will follow through with his proposal.
Robredo, on the other hand, crafted a four-point plan that aims to address the national oil crisis. Her first proposal is to give out “ayuda” or subsidies to affected drivers, emphasizing the expansion of cash aid to other members of the public transportation sector. Distributing subsidies for delivery riders, for instance, can be a short-term solution to address the ballooning price of gas that adversely impacts the sector’s members’ livelihoods.
The second point in her plan was in line with Colmenares’ first solution. During her stint as vice president, she asked to hold a special session in Congress to discuss interventions such as the suspension of the excise tax and other tax reduction measures. She also proposed a long-term approach to service contracting, suggesting that drivers receive a fixed monthly salary instead of the usual boundary system. This, she reasoned, will result in a more secure livelihood for drivers despite hikes in oil prices.
Lastly, Robredo proposed the shift to electric vehicles. The idea stemmed from her office’s vaccination initiative, wherein e-jeeps, e-trikes, and e-buses were used to transport and inoculate the public. This, she argues, will allow the country to reduce its dependency on gasoline, thus lessening the impacts of oil price increases whenever a global crisis occurs.
Perhaps with these suggestions, Marcos Jr. can push for a genuine and aggressive study on rising oil prices, the greed of the oil industry, and how to effectively respond to them — that is, if the newly minted administration has any sincere intention to relieve the struggling public. Until then, every Filipino is crucified by the endless increase in oil prices.
