'Okay for now'
'Okay for now'
Updated 03:11am (Mla time) Nov 28, 2004
Inquirer News Service
Editor's Note: Published on page A14 of the November 28, 2004 issue of the Philippine Daily Inquirer
THE ESTIMATES varied, but if even the police chief for Metro Manila says the transport strike last Thursday "paralyzed" 80 percent of the transportation system in the National Capital Region, then it must be considered a success.
The post-strike statements also varied, with other transport group leaders continuing to press for a P2 "discount" in the price of diesel. But if the president of the Federation of Jeepney Operators and Drivers Associations of the Philippines, the main transport group behind the protest action, was ready to claim victory, then the first transport strike in years must be deemed to have succeeded.
"We agreed to call off the (transport) holiday because they told us that they will address our concerns," Fedjodap president Zenaida Maranan told reporters. The main agreement reached Thursday -- in a six-hour meeting in the relative quiet of Camp Crame -- was for the oil companies to grant a 50-centavo discount. Maranan said the discount was "okay for now."
Yesterday, some 150 gasoline stations started implementing the 50-centavo-per-liter arrangement. It is not a price rollback, not quite, because the discount applies only to public utility vehicles. (Seaoil announced it would also grant a modest discount on gasoline for taxicabs.)
But the "now" during which the 50-centavo discount is "okay" is perilously short. The transport groups said they will organize a much bigger "transport holiday" if, in the meeting scheduled for Tuesday, another 50-centavo discount is not granted.
"That's for sure," Maranan said.
In other words, the main transport groups that went on strike are ready to climb down from their P2-per-liter position, and to accept the discount, as it were, on an installment plan.
Okay for good?
EXCEPT for the question of timing, this seems a reasonable strategy. It is, as businessmen would say, a deal that's priced to move. But only if we define success narrowly, to the question of immediate relief.
If, as many strike leaders believe, success is defined as winning permanent relief from rising oil prices, then the transport groups will only suffer frustration. Because what they are in effect asking for is the repeal of an economic law. After all, the pressure on pump prices is the law of supply and demand hard at work.
After Thursday's meeting, Energy Secretary Vincent Perez said a technical working group would study the transport groups' demands, including the rollback of pump prices and the scrapping of the oil deregulation law.
Now a rollback, when called for, is within the realm of the possible. The oil industry in the Philippines, like many other basic industries, suffers from the economic phenomenon called ratcheting: price increases are easier to implement than price reductions. The price wheel moves smoothly going forward, but becomes sticky when being moved backward.
A more responsive government can help move that price wheel backward, essentially by lending its weight. When crude oil prices drop, the Department of Energy can encourage the country's oil companies to reduce pump prices accordingly, at the soonest feasible time. How this can be done is a fit subject for the technical working group to study.
Scrapping oil deregulation, however, is a completely different matter.
As a nation, we already have more than enough experience with a regulated oil industry to know that a market-oriented pricing system is much the lesser evil. Re-regulation-and by extension, a buffer mechanism such as the late, unlamented Oil Price Stabilization Fund-would mean artificially low pump prices funded by even-bigger government deficits.
Maranan and other transport strike leaders may want to postpone the inevitable, but in the end it will be their children, and ours, who will end up paying.
The very concept of a discount applicable only to public utility vehicles is a step in the right direction. But the notion of re-regulation is a giant leap backward.
Updated 03:11am (Mla time) Nov 28, 2004
Inquirer News Service
Editor's Note: Published on page A14 of the November 28, 2004 issue of the Philippine Daily Inquirer
THE ESTIMATES varied, but if even the police chief for Metro Manila says the transport strike last Thursday "paralyzed" 80 percent of the transportation system in the National Capital Region, then it must be considered a success.
The post-strike statements also varied, with other transport group leaders continuing to press for a P2 "discount" in the price of diesel. But if the president of the Federation of Jeepney Operators and Drivers Associations of the Philippines, the main transport group behind the protest action, was ready to claim victory, then the first transport strike in years must be deemed to have succeeded.
"We agreed to call off the (transport) holiday because they told us that they will address our concerns," Fedjodap president Zenaida Maranan told reporters. The main agreement reached Thursday -- in a six-hour meeting in the relative quiet of Camp Crame -- was for the oil companies to grant a 50-centavo discount. Maranan said the discount was "okay for now."
Yesterday, some 150 gasoline stations started implementing the 50-centavo-per-liter arrangement. It is not a price rollback, not quite, because the discount applies only to public utility vehicles. (Seaoil announced it would also grant a modest discount on gasoline for taxicabs.)
But the "now" during which the 50-centavo discount is "okay" is perilously short. The transport groups said they will organize a much bigger "transport holiday" if, in the meeting scheduled for Tuesday, another 50-centavo discount is not granted.
"That's for sure," Maranan said.
In other words, the main transport groups that went on strike are ready to climb down from their P2-per-liter position, and to accept the discount, as it were, on an installment plan.
Okay for good?
EXCEPT for the question of timing, this seems a reasonable strategy. It is, as businessmen would say, a deal that's priced to move. But only if we define success narrowly, to the question of immediate relief.
If, as many strike leaders believe, success is defined as winning permanent relief from rising oil prices, then the transport groups will only suffer frustration. Because what they are in effect asking for is the repeal of an economic law. After all, the pressure on pump prices is the law of supply and demand hard at work.
After Thursday's meeting, Energy Secretary Vincent Perez said a technical working group would study the transport groups' demands, including the rollback of pump prices and the scrapping of the oil deregulation law.
Now a rollback, when called for, is within the realm of the possible. The oil industry in the Philippines, like many other basic industries, suffers from the economic phenomenon called ratcheting: price increases are easier to implement than price reductions. The price wheel moves smoothly going forward, but becomes sticky when being moved backward.
A more responsive government can help move that price wheel backward, essentially by lending its weight. When crude oil prices drop, the Department of Energy can encourage the country's oil companies to reduce pump prices accordingly, at the soonest feasible time. How this can be done is a fit subject for the technical working group to study.
Scrapping oil deregulation, however, is a completely different matter.
As a nation, we already have more than enough experience with a regulated oil industry to know that a market-oriented pricing system is much the lesser evil. Re-regulation-and by extension, a buffer mechanism such as the late, unlamented Oil Price Stabilization Fund-would mean artificially low pump prices funded by even-bigger government deficits.
Maranan and other transport strike leaders may want to postpone the inevitable, but in the end it will be their children, and ours, who will end up paying.
The very concept of a discount applicable only to public utility vehicles is a step in the right direction. But the notion of re-regulation is a giant leap backward.
posted by Dante at 3:11 AM
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