GOVT SAYS IT'S TRYING TO CONTAIN OIL PRICE HIKES
MANILA, June 7 , 2004 (STAR) By Marvin Sy - The government said yesterday it is taking appropriate measures to lessen the impact of the continuing oil price increases.
Presidential Spokesman Ignacio Bunye said Malacañang is aware of the serious repercussions of the continuing oil price increases but measures are being undertaken to prevent a "domino effect on the prices of basic commodities and public utility services."
"If necessary, the DTI (Department of Trade and Industry) will conduct a strict monitoring of the prices (of goods) so that there will not be an upsurge in the market prices," Bunye said in a statement.
He said that a long-term solution to the problem of increasing prices of commodities is to increase domestic production of basic goods.
Bunye cited as examples the government’s efforts to increase production of "Gloria Rice."
A hybrid breed of corn will also be introduced aside from the introduction of a new breed of tilapia, Bunye said.
Bunye said the government is also working on expanding its sources of oil from the traditional Organization of Petroleum Exporting Countries (OPEC) in the Middle East to those closer to the country such as Indonesia, Malaysia and Kazakhstan.
The country has started importing oil from Kazakhstan but Bunye said the government is working on increasing its importation in order to cope with the demand.
"There are no quick fix solutions to this global problem," Bunye said.
"Dialogue, discipline, solidarity and sacrifice are needed so that common solutions can be found involving the broadest range of affected sectors," he said.
On the calls for a review or repeal of the oil deregulation law to address the continuous price increases, Bunye said this might be an "overreaction."
He cited the argument of the Department of Energy (DOE) pointing out the law has actually softened the impact in the increase of oil prices.
Bunye said without the Oil Deregulation Law, prices of oil in the country might have been higher.
The DOE has admitted that there will be more fuel price increases, especially now that there is a continuing climb in global oil prices.
World oil prices have climbed nearly 47 percent over the past year, touching a 13-year high on May 6, with Dubai crude reaching $34.55 per barrel due to continued threats to Iraqi infrastructure, the rebounding economies across the globe and low fuel reserves in the United States.
US crude prices have likewise hit a 13-year high of above $38 per barrel and have remained above $37 over the past three weeks due to fears of a supply crunch. US wholesale gasoline prices also marched to a 20-year high, haunted by fears of a shortage during the period of peak summer demand.
The DOE has already used its economic diplomacy to convince OPEC to produce more crude oil to help bring down world oil prices.
Energy Secretary Vincent Perez said the growing world economies such as China contributed to the heavy increase in oil demand.
Other factors that pushed petroleum products’ prices up include the surge in demand, foreign exchange, competition and conditions in the marketplace.
The hike in local oil prices is expected to generate another wave of protests from various sectors, especially consumers who fear this will trigger a rise in prices of basic commodities and have an inflationary effect on other goods and services.
Power utilities and other fuel-dependent industries will have to adjust production costs to reflect the added cost of fuel.
Local economists said the Philippines’ economic growth can be cut by as much as 1.6 percentage points if oil prices continue to go up. They said a sustained increase in oil prices will cause clamors for higher wages, push up inflation and unemployment rates, and — in a grim scenario — even thwart the government’s efforts at economic recovery.
Oil giants Caltex, Shell and Petron Corp. have responded to increasing international oil prices by importing more finished products to save on operating costs. However, they are not totally isolated from the effects of the oil price crisis and will eventually have to hike local pump prices.
Earlier, President Arroyo ordered energy officials to ensure that oil companies do not use the oil price crisis as an excuse to unreasonably jack up oil prices.
International oil prices reached a high last May 13 that has not happened since November 1990. Dubai crude was at $35.19 per barrel due to the continued geo-political crisis in Iraq, the increasing demand of rebounding economies from various parts of the globe and the perceived low reserves in the US.
Perez said the DOE will closely monitor and scrutinize the magnitude of the increase by the local oil companies and if necessary, will enforce sanctions as provided under the Oil Deregulation Law should the increase be unwarranted.
Reported by: Sol Jose Vanzi
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