Oil prices and RP recession

Ok. I checked today and the world's crude oil prices being traded went down by about 4 pesos. Its trading in London by US$67.32 (US$1:48) or about 3,231.36 php per barrel.

Now, a barrel of crude oil contains 159 liters of oil. So, crude oil should have been passed to us only 20.30 php per liter. That is, if these oil companies get their crude in London.

If these oil companies claim that they get their crude from Singapore, the news said that even prices there fell to US$67 per barrel. That's even lower than our previous calculation.

Of course, oil companies may have to factor in freight costs and profits.

The average retail price of a gallon of gasoline in seven industrialized countries cost US$ 4-5 dollars (US$1:48). That's about 240 pesos per gallon. Now, since there is about 3.78 liters per gallon, gasoline should probably fetch here at around 63.49 pesos per liter, still lower than ours here.

But, that's not the point.

These oil companies are raking profit after profit says Oil Price Watch Chairman Roberto Concepcion Jr. When it was time to lower prices, oil companies did so ginger-ly. Now, why are companies raising their retail oil prices now?

According to a hedge fund analyst, oil companies are anticipating the recession. The World Bank says the recession would happen in the third quarter of this year due to weak economic activity. Should the economy weaken as predicted, this will surely impact on commodity prices, including oil.

Oil companies should explain this to the public in a more efficient way. I think the problem lies on the ineffective way these companies handle their external communications. People would understand if they just act with transparency.

Pilipinas Shell, Caltex & Petron should be punished!

Government should teach Pilipinas Shell, Caltex and Chevron a lesson. These giant oil companies showed arrogance in obeying a court ruling ordering the company to open its books. The company's counsels asked if the court has jurisdiction over them.

By the very fact that they are doing business here in the Philippines, they automatically subject themselves to the jurisdiction of our courts. If the courts say that this Dutch oil company open its books for public scrutiny, it should do so--without compunction.

If Pilipinas Shell would not oblige, then, they must leave this country and never come back. How dare they question our courts?! Same goes to Caltex and Petron. They should submit themselves to the jurisdiction of our courts.

Probably the problem lies in the lack of a law that would require them to submit their books to government scrutiny. In the US, all companies are required to follow the Sarbanes-Oxley Act which is a law obliging companies to open their accounts for reportage. They also have the US Government Accounting Office (GAO) which serves as the investigating arm of the government with regards to acts of private enterprises.

Are these 3 giant oil companies saying that they are above our government?

These acts are in direct contravention with the law and the very authority of this government. These oil companies not only committed a grave infraction---they also subverted the sovereign power of this government and the Filipino People.

What will Mrs. Arroyo do? Will she bow down to these giant oil companies or will she enforce the sovereignty of this government? This is a test case for Mrs. Arroyo.

Oil companies and Meralco: Big Players with Big Kapalmuks

Why do giant oil companies find it very hard to rollback oil prices, when small players can do it without batting an eyelash? Answer: they pay big bucks to government to protect their asses compared with what small players give as "tongpats". Remember that Shell, Caltex and Petron executives report to their global asses...err...bosses and they must report big profits; otherwise, as what Senator Kiko Pangilinan says they might as well abandon this tiny republic.

The energy undersecretary this morning admitted on national radio that these giant oil companies can't ask for recovery from losses anymore simply because they already re-coup whatever they incurred since July 2008. So, why are these giant oil companies still refuse to bring back oil prices to respectable levels.

Same as Meralco. You know, this crafty, little old abuser demands a 5-peso increase in their rates this month. I remember when GSIS President Winston Garcia was lambasting them and nearly acquired Meralco, the Lopez-owned utility firm justified the high price of electricity with the high prices of oil. Now that oil prices are falling, why is Meralco demanding for a rate hike? Kapal naman ng mukha ng Meralco!

We have the highest electricity rate and the highest gasoline and diesel prices in the entire Asia! These profiteers are doing their stuff to the detriment of the suffering masses.

Come to think of it...it's not only them who deserve the people's justice. We also must militate against food and rice traders who continue to sell high prices despite the falling global food prices. These people are so brazen in fooling us simply because we allow them to. It's time for the people to hit back at these people, especially Meralco. Meralco is the most vile utility firm ever to walk the face of this country. It should be partitioned and its franchise revoked by this government before it further cause destruction to the lives of the people.

Cheap Tricks

Yesterday, Gloria signed the Cheaper Medicines bill. It aims to bring down the costs of medicine. Senator Mar Roxas was there. He witnessed the signing of his pet bill. After that, he was interviewed, along with Gloria, and said that the bill will help Filipinos buy cheaper priced medicines.

Question to Mr. Roxas--how diluted is this approved version? I mean, Gloria thumbed down the "generics only" provisions of this bill. Now, based on your assessment, will this affect the prices of medicine? In the next few weeks or months, we will see if this bill will indeed, bring down the costs of medicines.

Two days ago, the DSWD and Meralco started giving 500 peso dole-outs to lifeline users of electricity. Question---how long will government give cash subsidies to the poor? Reports say its only for the month of May. Succeeding months, consumers will have to bear the brunt of high electricity rates. It's okey, says the apologists. At least, government extended some help to ease the burden. After this month, what then?

Gloria also ordered the Department of Energy to extend a 5-peso diesel subsidy to jeepney drivers and operators. Energy secretary Angelo Reyes says this is all there is to it. While Reyes was saying this, prices of gasoline and diesel shoot up to 1.50 pesos per liter. Diesel prices are now close to 50 while gasoline prices are nearing the 60 peso mark. Reyes can't do anything? And he says that he's a former Chief of Staff? What a wimp!

Question---why is Gloria's gang not touching Petron, Caltex and Shell? I mean, now is the time for government to intervene, but they are not? Marcos did regulate these oil companies before. Why can't we regulate them now?

The truth---oil companies probably give billions worth of lobby funds to silence government opposition. That's the only reason I see at this point.

Lastly, Gloria's gang are targeting telecommunications companies to lower text and call rates. That's commendable, to say the least. However, there's a catch--government will still continue getting VAT-related costs from them. So, the costs will still be considerable for the Filipino consumer.

Anyway, I had enough of this. Let us allow government to do its thing with all these cosmetic and palliative solutions and let's just see what will happen next.

There's one thing that is very evident in all these--government did not do its job properly during the last eight years of its administration.

Strikes to break the camel's back

Tomorrow, transport groups intend to make a lot of noise against the continued rise of the prices of gasoline. Bishops have encouraged the people to support these groups. With one peso hikes almost every week, people are tired of it and want to demonstrate their disgusts against government.

Another rally is set on May 17, ten days before the expected "takeover" of government in the utility firm Meralco. While we are talking about this, government has allowed the diminution of its stake in Petron, a former government owned and controlled corporation, now privatized. I can understand this since privatization is really the policy of government right now. While they are privatizing the oil industry, government wants a reverse in the power sector?

Government should probably consider raising its stakes in Shell, Petron and Caltex to be able to have a say in how these companies run their operations. I mean, being intrusive at this point is understandable, since the very lives of the people are at stake here. Instead of further divesting in the oil industry, government should take the industry by the neck and squeeze every profit from them. That way, government can directly ease the suffering of the people.

One question though--will these rallies break the camel's back?

Predatory governments a threat to democracy

Our government tried dipping its hands in the corporate pot during the dictatorship. When effective controls were lifted in the post-Martial law regimes, government owned and controlled corporations lost profitability and closed down. This affected growth which forced government to institute privatization to generate revenues.

When governments such as ours assume a predatory nature, foreign investments tend to get affected. If you look at the figures, the more predatory a government becomes, the less FDI flows in.

However, in the case of Meralco, this regime thinks it can do a better job managing electricity rates than what the Lopezes are doing. In the interest of the public, says Ermita and Gloria poster boy Winston Garcia, it's time to seize the utility firm from private hands. This policy is a reversal from the previous government privatization stance.

If this happens, what now with oil companies? Surely, this sends a chilling message to all those companies directly transacting with the public. Next to Meralco, will Gloria run after oil companies such as Shell, Petron, Caltex, etal? All the more she should do that. These oil companies rake in billions of pesos of profits.

How about telecommunications companies? With high call rates, all the more should Gloria and her misfits seize them to effectively lower rates. They should be seized as well.

Its a laudable effort on the part of Gloria to call for a lowering of electricity rates since compared with our Asian neighbours, our power rates are higher than them. A lowered electricity rate brings in more investments since the investment climate is perceived to be better.

Gloria's efforts at enhancing our competitive advantages as an investment site are sterling accomplishments. Nonetheless, Gloria should not be targetting just Meralco. She should also target PLDT, Bayantel and Globe Telecommunications. She also should take over Shell, Petron and Caltex, the three big players in the oil industry. Next to them, she should also seize food companies, especially those rice importers since they directly affect Pinoy lives. And even those wheat traders. All should be fair game.

As expected, we tend to like reverse growth instead of progressive growth. Predation is an anti-thesis of democracy. This is an extreme form of nationalism, an aberration in an increasingly globalized world.