BIZ COLUMN: A SLIPPERY ISSUE
MANILA, OCTOBER 29, 2009 (STAR) TAKIN' CARE OF BUSINESS By Babe Romualdez - Malacañang boys gave assurances that GMA’s directive for oil companies to roll back prices to Oct. 15 levels is just a short-term response to the state of calamity in Luzon. Big players have grudgingly followed the order, but warned of potential supply shortages in the next two weeks. According to an oil executive, the Palace directive might compel them to hold off new shipments since the mandatory price ceiling might bring them to a situation where it would be much better not to sell.
Of course, this warning did not sit well with government officials who saw this as “blackmail.” Speaker Prospero Nograles told oil companies government could take over their operations during emergencies and if it is in the national interest to do so. Left-leaning groups were quick to latch on to the issue, claiming that the threat of a supply shortage is an excuse for oil companies to hoard supplies. There are renewed calls for the repeal of the Oil Deregulation Law since it is suspected of being a tool to impose predatory pricing. Oil firms are accused of conniving since they raise or cut prices almost simultaneously at uniform rates without clear computations, as former NEDA chief Ralph Recto testified. Another beef particularly by those in the transport sector is the fact that smaller oil players can reduce prices more frequently and at bigger amounts than the “big three” companies.
Realistically, however, it would be difficult to regulate oil prices now since these are dictated by price fluctuations in the world market. Oil has become a prime global commodity, thus the law of supply and demand obviously figures in the equation. Besides, people must remember that oil firms are in business to make a profit. If they are compelled to sell products at levels lower than purchase prices, you can’t really blame them if they refuse to sell. Certainly, no sane businessman would want to sell his products at a loss.
One can only appeal to oil companies to exercise corporate social responsibility and show concern for the victims of Ondoy and Pepeng. While the mandatory price cut could affect their bottom line, it’s not as if they are on the verge of bankruptcy as some oil executives falsely project. In fact, a business publication named Petron Corp. the Number One among the Top 1000 Corporations in the Philippines, with gross revenues of over P268 billion last year – at a time when other businesses were suffering losses due to the global financial crisis. At number two was Pilipinas Shell, while Chevron Philippines landed at number five – underscoring that these oil firms are far from bleeding.
The administration’s hard-line stance regarding the oil price cut issue is being lauded by many Filipinos, but there are fears that this could give rise to more serious consequences with oil prices skyrocketing once the executive order is lifted. Many recall the days of the Oil Price Stabilization Fund which was effective in keeping pump prices stable despite volatile changes in world market prices. When oil prices were low, oil companies donated to the fund. When oil prices were high, government paid oil companies the difference. But like most good things, this one did not last because some politicians decided to use the fund for “other purposes,” making it virtually bankrupt. That’s when the 1998 Oil Deregulation Act was passed – which unfortunately, does not seem to work the way it was envisioned. Clearly, the country is in a Catch-22 situation. The recent calamities compel the government to act in the best interest of the people, but at the same time, it cannot afford to give the wrong signals to investors.
Some believe the problem is not so much the oil companies and the rising oil prices, but the fact that the Philippines had become very dependent on imported fuel. In fact, we are one of the most oil dependent nations in Asia, consuming 120 million barrels of petroleum products per year- which makes oil a rather slippery issue. People can rant and rave all they want, but the bottom line is that everybody has also contributed to the problem in one way or another. Perhaps one thing people can hope for is for government to find ways – and soon – to lessen the country’s dependence on imported fuel by tapping other sources like geothermal, wind and hydro power. Otherwise, we would continue to find ourselves in a vulnerable situation as the country’s population continues to grow – and along with it, the demand for more oil to sustain the needs of households and businesses.
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From ‘Chiz-mis’ to ‘Chiz-whiz’
In the beginning, the rift between Loren Legarda and Chiz Escudero were just rumors, but now it has been brought into the open with Chiz’s resignation from the Nationalist People’s Coalition yesterday. Loren is now free to choose her presidential candidate, and speculations are strong that she will probably join the camp of Manny Villar. Chiz has not declared his bid for the presidency, but then again, he may just pursue other plans since he is still young and can afford to wait for the right time. Besides, the entry of Noynoy into the race might have made things too tight for him.
In any case, this confirms what Ambassador and NPC chairman emeritus Eduardo “Danding” Cojuangco said that if Loren and Chiz do not get together, “all bets are off.” This latest development simply accelerates Danding’s wish to remain in the background and not to be involved in politics anymore. As Mark Cojuangco said, his father had already paid his dues. Danding can now be an ordinary citizen like most of us, and simply vote for the presidential candidate of his choice. Who knows – it could be one of his two nephews running for the top post. ECJ, at 74, has repeatedly said he just wants to concentrate on his business and enjoy the twilight of his years with his grandchildren.
Chief News Editor: Sol Jose Vanzi
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