Over the next few days, and possibly weeks, militant groups lined up street activities protesting the rapid spiral in fuel prices. Last week, they marched to the Department of Energy, vandalized the offices of oil companies and scuffled with police in a few other places.
It is easier to understand the utility of a transport strike. The aim here is to force government to raise fares. It seeks to break that untenable asymmetry where fares are regulated and oil prices are not.
The street protests, on the other hand, seem intent on forcing government to restore regulation of the oil industry. That, however, is an untenable option.
We know from sad experience that when oil prices are regulated, pricing immediately becomes politicized. Upward adjustments in prices provoke massive protests. More often, government anxious about their political capital choose to subsidize pump prices instead. That subsidy is the single biggest cause of our national indebtedness.
Once we begin re-regulating the oil industry, the structure of our fiscal discipline crumbles. We will begin going the way of Greece.
The street protests, therefore, are acts of futility. The moment we take steps towards nationalizing the oil industry, our credit rating will fall through the floor. Interests on our national debt will spike, no one will dare touch our bonds, and we will be well on the road towards another debt crisis.
Economist Ben Diokno proposed that government modulate oil prices by calibrating the value added tax rate on oil products. In a high oil price regime, government reaps a windfall from VAT collections. It could certainly afford to lower VAT in order to blunt the price increases.
The option, however, creates a hole in the VAT net. The feasibility of adjusting the tax rate as prices quickly rise and fall might be a question. Fluctuating VAT rates might induce speculative activity and misreporting of revenues. The measure’s actual effect on pump prices might be marginal at any rate.
Some sort of bandwagon formed behind the proposal nonetheless. The Vice President endorsed the idea. On the other hand, the Palace flatly rejected the proposal.
At any rate, government is really helpless in the face of the oil prices spiral. This is driven by large factors in the global markets as well as by political tensions beyond our reach to resolve.
The best government can do at this time is to offer highly targeted subsidies to transport groups. This is a largely ineffectual and populist solution. The subsidies are almost inconsequential. Its coverage cannot possibly include the millions of households now paying more for cooking gas.
The main cause pushing up oil prices at this time is anxiousness over the possibility of an Israeli strike on Iran’s nuclear facilities. The window for this Israeli option is rapidly closing and the rightwing government in Tel Aviv is itching to pull the trigger.
This is not an idle threat. A few years ago, I listened to a briefing by an intelligence official in Tel Aviv. We were shown before-and-after aerial photos of a Syrian facility processing radioactive material. Although never admitted officially, Israel apparently demolished the facility by an air strike. Damascus, which never admitted they had the facility, could not protest the action.
Today, the price of oil reflects the rising tensions over Iran’s nuclear program. A new conflagration in the Middle East could disrupt oil supplies globally. That fear drives up prices and there is nothing we can do to cure that.
Two votes
There is no peace in Taguig City either.
Off and on, the Taguig City hall has been barricaded by supporters of the sitting mayor to prevent the Comelec from retrieving the ballot boxes from the 2010 elections in connection with the electoral protest filed by retired justice Dante O. Tinga.
Of all the localities where electoral protests were filed, it is only in the case of Taguig where the ballot have not been retrieved by the poll body. The Comelec issued a total of nine orders for retrieval of the ballots. They have failed to collect the ballots to date either because city hall was barricaded, or repetitive motions for reconsideration were filed by the camp of Laarni Cayetano, or military escorts for Comelec retrieval teams became suddenly scarce.
The Tinga camp insists that Comelec’s failure to retrieve the contested ballot boxes is due entirely to the political influence exercised by Laarni’s husband, Sen. Alan Peter Cayetano, and his sister Senator Pia Cayetano. Tinga claims the Cayetano siblings applied great pressure on Comelec chair Sixto Brilliantes when he was up for confirmation and then when the agency’s budget was up for Senate consideration. During both instances, says Tinga, the progress of the Taguig electoral protest stalled.
Tinga maintains that a technical examination of the compact flash cards (CFC), which the Cayetano camp claims is a precondition for revision of the contested ballots, is not mandatory. He says that a comparison between the ballots and the electoral returns (ERs) is all that is necessary for the Comelec to do to settle the protest. If the ballots match the ERs, then the canvass is sustained.
If there is a discrepancy between the ballots and the ERs, the ballot recount prevails. The losing party may then appeal by referring to the CFCs. If there is discrepancy between the ballots and the CFCs, the latter count prevails.
In this process, says Tinga, technical examination of the CFCs plays no role and that requirement is only used to delay the process. The real cause for the delay, he suspects, is that the Cayetano siblings account for two votes in the impeachment court.