Tariff cuts not effective vs. excessive oil prices

Militant labor center Kilusang Mayo Uno (KMU) said that the Malacanang must stop acting as if it is doing something about the problem of unending oil price hikes. Instead of issuing out lame solutions and pampering the whims of oil companies for more profit, the Arroyo government must significantly address the people’s economic difficulties.

“Executive Order 527 or the move to cut tariffs on oil imports from 3 percent to 2 to zero percent cannot serve as panacea to continued increase in oil prices from its expected domino effect on the oil industry. Since the advent of the deregulated oil industry, prices are subject to the whims of the oil companies and not on the dynamics of the market. Instead of decreasing pump prices, it will only fatten the pockets of oil companies due to less cost they will incur,” states KMU.

“Tariff reduction will not at all cushion the impact of the high oil prices on the local market and on consumers. As we have always pointed out, oil companies are maneuvering the pump prices of petroleum products. Weak government intervention in the form of tariff cuts cannot stop Shell, Caltex, Petron and new oil players from increasing their prices. They will always find ways and alibis to get away with frequent oil price hikes,” said KMU Spokesperson Presto Suyat.

The labor group said that the only acceptable way to effectively address the perennial problem of sky-high oil prices is to repeal the downstream oil industry deregulation law and reinstate and strengthen necessary government regulations on the local oil industry.

“The government must seriously consider dropping the deregulation law and undertake centralized procurement efforts with regards to imported crude oil and refined petroleum products. It must also seriously undertake the buy back of Petron Corporation and must actively involve itself in petroleum refining. These are some of the urgent, doable response to high oil prices. Doing these will somehow restrain oil companies from increasing their prices all too often,” Suyat said.

“Above all, workers need a decent wage increase to buffer their dwindling economic situation. We will all the more press for a P125 wage increase. The granting of significant and living wages are all the more justified now,” he ended.