Hidden fuel costs

The unabated weekly price increases in gasoline, diesel and other petroleum products imposed by the “Big 3” and the rest of oil industry players have become a great national burden. In fact, P450 million of taxpayers’ money will be given out as subsidy to public utility jeepneys and tricycles. This stop gap measure seeks to forestall any fare hike by mitigating the impact of these weekly oil price hikes on the take-home income of PUJs and tricycle drivers from their daily pasada.

The government, through the Department of Energy has started the process on how to implement this subsidy through a smart-card system to make sure the fuel subsidy directly goes to PUJ and tricycle drivers. The card is set to be distributed starting May 2 through organized PUJ and tricycle groups.

The oil price crisis has consequently pushed up prices of food and commodities. So the government plans to expand the coverage of this subsidy to include fisherfolks and farmers who also use fuel to run their fishing boats and tractors, respectively.

This is not to mention the recent announcement by Meralco that electricity rates will go up by 20 centavos per kilowatt hour due to increased generation costs. Most of these power plants are run by bunker fuel. 

Thus, the prolonged spate of oil price increases is no longer a consumer issue but has turned into a national security concern. But President Benigno “Noynoy” Aquino III is not about to push the panic button yet. From the latest words from Malacañang, the President sees no need to even consider the grant of “emergency powers” being pushed by his allies in Congress to help government deal with the worsening oil price problem.

P-Noy has also shrugged off suggestions to convene a meeting of key government officials with the leaders of Congress under the umbrella of the Legislative-Executive Development Advisory Council (LEDAC). The Chief Executive reportedly shuns being told what to do, that’s why. A three-term congressman himself, and a Senator for three years, Mr. Aquino only knew too well how lawmakers tend to be know-it-all people. So it’s quite understandable why P-Noy has obviously ignored such suggestions to convene the LEDAC.

P-Noy has frowned upon persistent proposals by a number of legislators to reduce, if not suspend this temporarily, the 12 percent value added tax (VAT) that is tucked on gasoline and other refined oil products. The President’s stand on the matter is expected since the government collects more VAT with these oil price increases.

The Department of Finance estimated P52 billion VAT collections for this year. But due to the oil price hike, the VAT collections are projected to hit P60 to P70 billion. Thus, the Palace disclosed yesterday the P450 million for fuel subsidy may be increased to extend this assistance to more than one month allocation.

As earlier announced by the Palace, the Aquino administration would come up with a slew of government measures and schemes to alleviate the plight of Filipinos, especially the low income families to enable them to cope with the impact of the oil price crunch.

One of these measures apparently was the go-signal given by Department of Labor and Employment (DOLE) Secretary Rosalinda Baldoz for the national wage boards to start public hearings on pending wage increase petitions.

Bragging aside, long before the government announced their support for wage hike petitions, the management of The STAR has given us all employees pay adjustments effective April 1 this year. “We want to set an example for other companies. Hopefully, they will follow,” Miguel G. Belmonte, STAR president and chief executive officer said.

Then, Department of Justice (DOJ) Secretary Leila de Lima announced she would form a fact-finding panel that will look into the 12 successive oil price increases since last year and determine whether the oil firms are liable for violation of the Oil Deregulation Law.

The DOJ took this action a day after the “Big 3” – Pilipinas Shell Petroleum Corp., Chevron Philippines, and semi-state owned Petron Corp. implemented last Monday their latest price hike. Premium unleaded gasoline and diesel prices were raised by P1.50 per liter; regular gasoline by an average P1.25 per liter; and kerosene by P1.40 per liter. Thus, premium gasoline prices will range from P53 to P60.81 per liter, and diesel between P46.45 to P50 per liter.

“This is to reflect movements in the international oil market,” is their common reason every time they jack up their pump prices.

But what is not being addressed here are the hidden costs behind these oil price increases. While the Middle East tension has pushed up world crude oil prices, there have been domestic pressures that have likewise driven up domestic pump prices of refined oil products here.

As I gathered from oil industry players, the closure since December last year of the gasoline pipelines has added transport costs in their fuel deliveries. This was after the pipelines of the First Philippine Industrial Corp. (FPIC) were shut down following the reported leak that came out in the basement of the West Tower condo building in Bangkal, Makati.

Particularly affected in the closure were Shell and Chevron which get their gasoline and diesel deliveries from the FPIC pipelines. The underground pipelines run all the way to their main depots in Batangas going to Manila. FPIC has since then repaired and upgraded the integrity of the pipelines after the source of the oil leaks were located.

In compliance with the Writ of Kalikasan order issued by the Supreme Court, FPIC is set today to clean up the remaining oil leaks at the West Tower basement. This is the final safety requirement to test before the pipelines are allowed to re-open. Some unseen forces, though, are obviously engaged in a squeeze play to prevent the clean up to proceed. For what reasons, we don’t know.

But certainly, this is not helping any to address the disruption of the normal delivery and supply of gasoline and diesel that pass through the pipelines. Unless these pipelines are re-opened at the soonest possible time, such hidden costs would continue to be passed on to us consumers. And no amount of government intervention could mitigate these added hidden costs to oil price hikes.