Aquino's Administration's Way of Combating Oil Price Hike is Futile

Article: Fuel subsidy useless

Source: Manila Bulletin - Saturday, April 9,2011

MANILA, Philippines - The frequent oil price hikes have rendered the government's fuel subsidy program useless, jeepney drivers and operators said on Saturday. George San Mateo, secretary general of transport group Pinagkaisang Samahan ng mga Tsuper at Operator Nationwide (PISTON), said the upcoming round of price increase only proves that the fuel subsidy of the Aquino administration is ineffective in addressing the problem brought about by oil price adjustments. He said the government would not be able to solve the problem unless it suspends the implementation of the oil deregulation law. "Mariin po naming kinokondena ang Aquino government sa anunsyo ng Department of Energy (DoE) na may oil price hike na naman sa Martes, April 12, na posibleng aabot sa P1.27 to P1.29 sa kada litro ng diesel at gasoline," said San Mateo. ["We strongly condemn the government for the DoE announcement that there would be another round of oil price increase on Tuesday, which might be around P1.27 to P1.29 per liter of diesel or gasoline."] He said suspension of the oil deregulation law is the ultimate solution to the problem because it would allow the government to control and stop the surging prices of fuel. San Mateo said the government should likewise suspend the law imposing value-added tax on fuel. He said suspending such law would enable the government to roll back the prices of diesel and gasoline by P5.64 and P6.60, respectively, per liter. He said the leaders of their group will huddle on Sunday to discuss the strike they plan to stage in front of Shell Philippines' head office in Makati on April 12. He said they will also tackle their preparations for the May 1 nationwide strike in expression of their protest against overpricing of oil and other commodities, and their advocacy for the proposed P125 nationwide wage increase.

Reaction:

            In our personal ambitions we are individualists. But in our seeking for economic and political progress as a nation, we all go up or else all go down as one people.

            Our country has been buffeted by several various economic problems lately. The issue above has been long – time problem of fuel consumers, both public and private entities which greatly affected our people most especially commuters. Standing as part of the third world countries, it must have been very difficult on our part to get through amidst the increasing prices in market and oil price hikes. Indeed President Benigno Aquino’s decision of granting fuel subsidy to jeepney drivers, farmers and fishermen seemed futile after another oil price hike was recently implemented, thus defeating the purpose of alleviating the crisis. If only the suspension of value-added tax on fuel products will be pursued, saying removing the VAT for diesel can bring down prices by more than P5/liter. Then certainly, it could have provided us with a more realistic solution than what was earlier proposed. With this, I couldn’t help myself but think that the government might just trying to shore up its sagging image through the so called “fuel subsidy”. At the end of the day, it doesn’t really free us from the frets of inflation. Hence, this reinforces the belief that Palace needs a better plan to mitigate the impact of rising plump prices. But I think this proposal overlooked vital facets in the execution of fuel subsidy. Aside from it is just a short-term solution which is not much promising, the fuel subsidy will also only benefit certain sectors and even as it is yet to be implemented, the oil price hike already negated the effects of the government's fuel subsidy. Also under the governments fuel assistance program, they will distribute 214,000 smart cards each good for P1,050 worth of diesel fuel . And in my point of view, it is rather impractical to use smart cards given that some gas stations presumably those in rural areas are not equipped to accept fuel cards. Also, it is not yet clear on how the government will distribute them. As Piston Secretary-General George San Mateo once said, It will take three to four weeks before the smart cards will be usable. It will take a long time for us to get the benefits from that, and you don’t even know if it will get to the jeepney driver or the tricycle driver because the money will be given to the operators. Say for example a jeepney has two drivers, hence there will be discrepancy in the dissemination.

            Relatively, in economics point of view – the “Law of Supply and Demand” – The supply is high, when the demand is low. Also, when the supply is low, the demand is high. Hence, they are inversely proportional with each other. Humorously, this is very far from the oil supply and the demand of necessity in industry especially in the Philippines which cannot provide from oil deposits in Malampaya. And since we are dependent on powerful oil producing countries, we don’t have control on the global market of petroleum.

            The government must do something that will have a positive impact. It’s a good response though from the government to subsidize the fuel. The allocation of P450 million is a serious manifestation of the Aquino’s administration to combat oil price hike in the form of pecuniary aid. However, they also ought to come up a feasible plan that would greatly benefit the most. The government should not begrudge the wealthy if they also benefit, because the plan will also meet the objective of providing relief to the poor. Hence, we should work hand in hand to come up a solution because at the end of the day the success of this nation would greatly depend on its people.