Analysis | Beyond fuel taxes, regulating and nationalizing the oil industry

The price of diesel at the pump has already increased by 18.45? (US $ 0.36) per liter, including the last adjustments from October 26 of this year. (Photo by Carlo Manalansan / Bulatlat)


How much exactly are jeepney drivers losing due to relentless increases in oil prices?

The pump price of diesel has already increased by P18.45 (US $ 0.36) per liter (including the latest adjustments on October 26) this year. This equates to two passengers paying the minimum fare of P9 ($ 0.18). Since jeepneys are only allowed at a maximum passenger capacity of 50%, the impact on a driver’s income is huge. A 20 passenger jeepney can only carry ten passengers. With diesel prices rising this year, jeepneys practically only take eight passengers at most and pay the minimum fare.

One month of rice

For example, let’s look at the UP Diliman road to SM North Edsa. The entire route is approximately 13.25 kilometers round trip. According to a study, a jeepney consumes about one liter of diesel per seven kilometers. Thus, the UP-SM round trip consumes around two liters of diesel. This means that a driver loses P36.90 ($ 0.73) per round trip due to the price hike. This amount is almost equivalent to the lowest price of rice per kilo (P38 or $ 0.75) in the NCR.

A 20-passenger jeepney typically has a full tank capacity of 60 liters, which means the driver spends an additional 1,107 P ($ 21.83) to refuel. This equates to about 29 kilograms of rice – equivalent to two weeks of regular consumption by a household of five to six members.

For the UP-SM pilot, his full tank will last around 30 round trips. Assuming he makes ten round trips a day, that means he has to refuel every three days – or twice in a week. As a result, he is spending 2,214 P ($ 43.67) more on diesel because of the rising prices. This is equivalent to a month’s consumption of rice for his household.

However, raising the minimum fare will only shift the burden of rising oil prices from drivers to commuters. Like jeepney drivers, commuters are also working class people who have been severely affected by the pandemic and are barely making a living.

What about the proposal to relaunch the Pantawid Pasada program from the Gloria Arroyo era? On the one hand, cash aid is likely to be too small to reduce the spike in oil prices. The proposed grant cited in media reports, for example, is between P1700-2000 ($ 33.53- $ 39.45) per month. As mentioned, the UP-SM pilot is already spending an additional 2,214 P ($ 43.67) per week. But the amount of the cash grant is a side issue. The main point is that the Pantawid Pasada only shifts the burden of rising oil prices onto taxpayers, including the drivers themselves.

Hold the oil companies and the government accountable

Meanwhile, the oil companies that profit tremendously from high prices and unreasonable price hikes are being left out. Policy interventions should primarily target them. One is to effectively regulate prices to stop their profits when they adjust prices every week.

The government must also be held accountable. The people should pressure policy makers to abolish regressive and exorbitant fuel taxes, such as the 12 percent value added tax (VAT). This move can immediately lower prices at the pump and provide much-needed relief to Jeepney drivers and the public.

At 12%, the Philippines applies the highest rate in Southeast Asia for VAT or VAT-like charges. Cambodia, Indonesia, Laos, Malaysia, Thailand and Vietnam charge 10%, while Singapore charges 7%. We also charge a higher rate than some of the more prosperous countries in Asia Pacific like Australia, Japan, and South Korea, which all charge 10%, and Taiwan, which only charge 5%.

While it is not the Philippine government that sets the price or price adjustments in the global oil market, it should nonetheless let go of its defeatist stance and imaginary cries of helplessness as Filipinos suffer from rising prices. The government can directly and immediately reform its tax policy on petroleum products and reduce the cost not only to jeepney drivers and their households, but to the economy as a whole.

Regulation and nationalization

Beyond the abolition of oppressive fuel taxes, the government can and should repeal Republic Law (RA) 8479 or Petroleum Deregulation Law to protect the public and the country from excessive prices and unreasonable price increases. In its place, policymakers must develop and implement a comprehensive program to regulate the downstream petroleum industry.

This program, which Congress can legislate, should contain the following essential elements:
1) Centralized supply of imported crude oil and refined petroleum products;
2) Buffer fund, which can be financed through centralized procurement operations to cushion the impacts of sudden spikes in world prices;
3) Transparent determination of prices at the pump, including through full public disclosure of the pricing system and the inventory of oil companies;
4) Democratic public consultations or hearings to justify oil price adjustments; and,
5) State participation in the refining and distribution of petroleum products.

It is seldom discussed that the issue of high oil prices and allegations of price manipulation is only a consequence of the fundamental problem of the Philippine oil industry, which is foreign monopoly control through their direct investments and their investments. strategic partnerships with local compradores. The country must seriously pursue a long-term nationalization program that would end the domination of transnational corporations and their local agents. The first reforms cited above to regulate the downstream activities of oil companies are a positive step towards nationalization.

Nationalization requires the reorientation and restructuring of the oil industry to maintain the well-being of the people and advance the national interest. For example, with a nationalized oil industry, the people and the economy would genuinely benefit from companies like Malampaya instead of foreign capital and local cronies and oligarchs operating such projects for their narrow private interests.

It is difficult to nationalize the oil industry if the government does not move away from its current neoliberal development paradigm, which allows the unbridled functioning of so-called market forces and relies too much on imported raw materials and capital. foreigners. Nationalization of the petroleum industry can only be successful as part of a national industrialization program where internal sources of growth are promoted and protected. (RVO) (


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