Oil price drops, but Meralco rates go up

THE ORGANIZATION of Petroleum Exporting Countries decided last week to maintain current production levels at around 31.5 million barrels of oil per day, despite a growing surplus estimated at 700,000 to 1.8 million BOPD in the world markets.

The OPEC decision has depressed crude oil prices below $40/barrel, which should keep oil products cheap in the months ahead.

After examining 45 countries, the global forecasting firm Oxford Economics Ltd. had projected that the Philippines would be the biggest winner and its economy would grow the fastest in a depressed oil price setting.

Lower oil prices should enable Filipino consumers to realize savings from reduced fuel, electricity, and transport costs and buy other goods and services. They could also keep lending rates low, thus helping families buying new homes and cars, or even businesses planning expansion.

Government infrastructure projects could also take advantage of this cheap energy regime.

• Meralco, Napocor raising power rates

THIS BEING so, why is the Manila Electric Co. (Meralco) raising its rates this month? The power company points to an increase in the generation charge, which rose by P0.046 per kwh from last month for the second consecutive time this month.

As a result, the overall rate for residential customers will rise by P0.055/kwh, from P8.55/kwh in November to P8.605/kwh this month. A typical household using 200 kwh will see its electricity bill go up by P11 this month compared to the November bill.

If it is any consolation, Meralco said that despite this rate hike, the power prices for households will end the year 13 percent, or P1.260/kwh, lower than the P9.865/kwh rate in December 2014.

This month’s overall rate is the fourth lowest since January 2010 although other bill components posted increases – transmission charge by P0.007/kwh due to the higher ancillary service charges; taxes and other charges (system loss and subsidies) a combined increase of P0.002/kwh; and charges from the Wholesale Electricity Spot Market (WESM) by P0.535/kwh due to the lower generation from hydro plants and the higher extent of forced outages in November compared to October.

Plants under the Power Supply Agreements (PSAs) also registered a slight increase of P0.009 per kwh due to lower dispatch of SEM Calaca and the increase in fuel cost of Ilijan driven by the weakening of the peso against the US dollar.

It does not end there. The National Power Corp. (Napocor) wants to raise its rate by an average P2/kwh for recovery-cost adjustments. The proposed increases are by P2.0627/kwh in Luzon, P2.3236/kwh in the Visayas, and P1.4534/kwh in Mindanao. The proposal is now before the Energy Regulatory Commission.

• How Finland fights recession, poverty

OVER in Finland, the government plans to pay each of its 5.4 million citizens a monthly tax-free basic income of $876 per month for three years to pull itself out of a recession and fight poverty.

The Finnish Social Insurance Institution (KELA) is drafting the basic income plan to replace social programs, like welfare and unemployment benefits, for implementation by November 2016.

Basic income, popularized in the 1960s by Milton Friedman, has been debated by economists for years, but Finland would be the first major nation to implement the model for all citizens. His idea was to “provide payments from the state that would increase in inverse proportion to income.” A poll showed that 69 percent of Finns support the plan.

One wonders how in da Pilipins such a scheme would work considering the kleptocrats infesting the social welfare bureaucracy. The controversial P65-billion annual Conditional Cash Transfer dole-out program of the Aquino administration has failed to alleviate poverty.

About six in every 10 Filipino voters rate themselves poor in the latest survey of the Social Weather Stations conducted Nov. 26-28 nationwide among 1,200 registered voters.

Results of the survey, commissioned by a certain William Lima, show that 59 percent claimed to be poor, 20 percent considered themselves “on the line,” while 21 percent said they were not poor.

(In the previous SWS non-commissioned survey last September, 50 percent of the respondents rated themselves poor.)

Most (71 percent) of the respondents in the last survey from the Visayas considered themselves poor, 14 percent on the line and another 14 percent not poor. Sixty-seven percent of voters in Mindanao said they were poor while 22 percent said they were on the line.

• A false, fleeting sense of prosperity

IN METRO Manila, 38 percent considered themselves poor, 46 percent claimed they were not poor, while 16 percent said they were on the line.

In the rest of Luzon, 54 percent of voters said they were poor, while the remaining 46 percent is split evenly between not poor and on the line.

In the same survey, almost half (46 percent) of Filipinos expect their lives to improve in the next 12 months, against 5.0 percent who expect life to get worse, for a net score of +41 percent.

Net personal optimism was highest in balance Luzon (+47 percent), followed by the National Capital Region (+42 percent), Mindanao (+36 percent) and the Visayas (+32 percent).

The survey again showed the Filipino to be the eternal optimist, often falling back on a fatalist “bahala na” attitude.

It has been shown that historically a national election year, such as 2016, triggers an accelerated release of multibillions into the money stream, raising a false and fleeting sense of prosperity.

*      *      *

NOTA BENE: POSTSCRIPTs are archived at www.manilamail.com (copy/paste url on address bar). Follow us via Twitter.com/@FDPascual. Email feedback to [email protected]