‘Moral suasion’

At this stage, it would seem there is no respite any time soon in the steep increases in our domestic prices of gasoline, diesel, and other refined oil products. In fact, Department of Energy (DOE) Secretary Alfonso Cusi admitted yesterday the prices of gasoline, diesel and other petroleum products may even breach P100 per liter. This is if the price of crude oil in the world market would further spike due to the ongoing war in Europe where Ukraine is fighting off the Russian invasion into their country.

No less than President Rodrigo Duterte echoed his worry on the economic impact of the raging Ukraine-Russia armed conflict in that part of the world. We sensed this during the televised portion of the Cabinet meeting at Malacanang last Monday night. The President digressed to talk about the Ukraine-Russia war after he got update reports on our government’s winning the “war” against the coronavirus disease 2019 (COVID-19) pandemic crisis.

“More so that there is, I think, even if it (crisis) ends, the fractured economy is already in Europe (and it) would affect us more or less by next year,” the President warned.

In particular, the President picked up the report of Socioeconomic Planning Secretary Karl Chua on two of the 14-point measures recommended by his economic team that require legislation by the 18th Congress. These were, namely, increasing the petroleum buffer stock from 30 to 45 days; and, increasing the buffer stock from seven to 15 days of liquefied petroleum gas (LPG) used for cooking. The economic team told the President they are ready to recommend the holding of special sessions of Congress before the Ukraine-Russia conflict escalates further.

While obviously keeping an open mind, the Chief Executive feels the politics of the election season might only get into the way.

“Let us be frank with Congress. This is intended really for the welfare of the people. If you have the time, sit with us and we can discuss it. Otherwise, you’re on your own. If not, you would only set aside the things studied by the outgoing administration,” the President pointed out.

Lawmakers led by Albay Rep. Joey Salceda have urged President Duterte to convene special sessions of Congress to tackle in particular the bill seeking to amend Section 43 of the Tax Reform for Acceleration and Inclusion (TRAIN) Law. As chairman of the House ways and means committee, Salceda is one of the principal authors and sponsor of the TRAIN Law that allowed the suspension of the excise tax on gasoline and other refined petroleum products should the world price of crude oil rises beyond $80 per barrel for three consecutive months.

However, the application of prescriptive period under the TRAIN Law had already lapsed in 2020. Thus, Salceda explained, the proposed amendment could provide immediate relief to consumers who are affected by the successive oil price hikes. According to Salceda, the House version of this bill was already approved last November. He urged the Senate to just concur or adopt this for speedy passage into law during the three-day special session.

Cusi has endorsed to the President the proposed amendatory bill for his certification to fast-track its approval into law. Ironically, there was no mention of the proposed review of the Oil Deregulation Law that President Duterte earlier supposedly asked for to allow the government intervention during prolonged increase of prices of oil products.

In the meantime, Cusi sat down and convened an emergency meeting with the oil industry players last Thursday at his office. This was after the Brent crude rose the previous day to $120 per barrel level before settling at $114 as the war between Russia and Ukraine intensified. This translated to the 10th consecutive week increase in the price of P5.85 per liter for diesel and P3.60 per liter for gasoline.

During that meeting, the oil companies reassured the DOE Secretary there is no problem in their supply. “They already have discount programs amounting to P1-4 per liter. We asked them if they can increase and the oil companies said they will review this,” Cusi disclosed.

But shoppers can get a bigger discount of as much as P5 to P10 per liter of gasoline and diesel in their promos if we buy grocery stuff from Landers and S & R chain of stores. This is not a paid advertisement but an argument to their measly P1-4 per liter discount offer.

Apparently, the “big 3,” namely, Petron, Chevron and Shell and the other players in our country’s oil industry are only willing to provide relief to the consuming public through measures that would not cut in much to their profit margins.

It’s about time President Duterte show his fangs again like he did when he demanded better services and more reasonable water rates from the Manila Water and Maynilad under the pain of rescinding their concession contract with the government. While indeed the price-setting is beyond the control of the government by virtue of the Oil Deregulation Law, this does not, however, diminish the power of the Chief Executive upon obvious abuse of the oil price crisis that the Filipinos all bearing the brunt, except the oil companies here.

Salceda calls it “burden-sharing” between the government and the private corporate sector, in this case, the oil industry players here. Regarded as the resident economist of Congress, Salceda stressed, the government could still shell out some more out of the “katas of the TRAIN Law,” or the would-be foregone revenues from excise tax suspension.

Methinks, President Duterte should this time apply his “moral suasion” on these oil industry players, big and small.

Policymakers use “moral suasion,” or jawboning, to persuade others, or a group of people to act a certain way through persuasion rather than force to influence the market and public sentiment.

When “moral suasion” strategies are used, it’s typically designed to influence the markets, market participants, and the economy in a positive direction. In strict economic terms, “moral suasion” is a strategy used for the greater good.