Last Monday, leftist-led jeepney drivers’ group Piston mounted what they called a "nationwide strike." As always, the success of such an endeavor is the extent to which it is able to "paralyze" movement, disrupt the normal flow of daily life and cause harm to our economy.
Fortunately, the more responsible jeepney drivers’ groups refused to join the leftist project of mindless disruption and lame-brained demands. In the metropolitan area, the so-called strike caused discomfort to some commuters but generally failed to shut down the urban economy. The strike had a little more success in a few other places where communist guerrillas were in a position to threaten transport workers and enforce the strike call.
The leftist jeepney federation failed to build a consensus for the strike because they were not in fact calling for an increase in fare. Transport fares have, after all, just been increased. Calling for yet another round of fare increases would have constituted bad public relations for the leftist groups.
The slightest thread used to justify that disruptive action was the old, worn out leftist demand to re-nationalize the oil industry by reversing deregulation.
That demand has been raised again and again each time there is a price adjustment in oil products. As a gesture, government has even conceded the formation of an independent commission to study the effects of deregulation policies.
That commission confirmed the correctness of oil deregulation.
Deregulation produced competition where there was none before, during the period of control and nationalization. Deregulation enforced competitive practices among the players in the industry, resulting in better efficiency. Deregulation made the players in the oil industry to think hard and work hard in order to deserve their profit where, during the period of regulation, the profit rate was ensured regardless of corporate efficiency.
The sum of all these is that we have one of the lowest prices for oil products in the world. Our oil industry is robust and comparatively efficient, considering we import nearly all the oil we use.
Most important, government is not constrained to subsidize oil consumed. That is no small matter.
Among our neighbors, such as Indonesia and Thailand, where retail oil prices are publicly subsidized, fiscal uncertainties have been produced by rising prices for crude worldwide. The larger and larger subsidies paid out by governments in these two countries not only divert scarce public funds from projects that benefit the poor to a consumer product enjoyed disproportionately by the rich. These subsidies created pressure on the exchange value of their currencies.
Thus, the more they subsidize oil, the greater the likelihood that governments would borrow money to cover the cost of subsidizing. That translates into pressure to push up interest rates and invites adverse speculation on the currency.
Indonesia produces some oil – although not enough for its domestic needs. It is therefore a net oil importer.
The Indonesian public thinks that since their country is an oil producer, the product ought to be cheap. That mentality puts political pressure on government to subsidize oil prices, even at the risk of torpedoing its own fiscal and exchange rate stability.
Should a new Asian financial contagion break out, the first domino to fall will likely be Indonesia. It will fall because of the fiscal vulnerabilities resulting from the subsidies on oil.
In contrast, our deregulated oil industry has helped reinforce our fiscal stability. Government is not obliged to subsidize oil consumption. As global prices rise, that rise is immediately reflected at the pumps – resulting in consumers self-enforcing prudent use.
There is a silver lining in the fact that retail prices for oil are not insulated by subsidies.
The Philippines is way ahead of most other oil importing countries in diversifying its sources of energy. We are, for instance, second only to the US in geothermal energy production. We are now using coco methyl ester, building biomass generating capacity and expanding wind power as a source.
In addition, we have cutting edge, Filipino-patented technology to reuse and recycle oil without polluting the environment. This is a priceless asset. In a while, we will be shifting to the use of compressed natural gas in our transport and increasingly, in our power generation.
The long-term, strategic importance of diversifying our energy sources cannot be underestimated. Oil will never again be a cheap commodity.
The current oil price regime has put us on a forced march to develop alternatives. That will be good for the country in the long run.
In sum, the demand to revert back to a "nationalized" oil industry, a cover for unmitigated subsidies for a scarce product, is entirely without merit.
But that does not impress the leftist militants. They are presenting the demand to re-nationalize large as agitprop, as an attempt to harness the discomfort of expensive oil to generate outrage against government with the hope of overthrowing it.
The strike called last Monday has, therefore, no edifying value for our people. The excuse for it is lame-brained. The leftist insult the intelligence of our people by offering an unsustainable and ultimately destructive "alternative" to the unalterable fact that oil will henceforth be an expensive commodity.
The real motive for the strike is even darker: to add to the destabilization.
The leftist groups have invested much the past few weeks in the effort to produce yet another round of political turbulence that will, they hope, get things unhinged and give them a crack at power. They have thrown their people to the streets, agitating for yet another uprising.
Their motives are vain and unpatriotic.