It’s time for jawboning

More than dismay or surprise, we all surely got the grim shock at the latest oil price hikes in our country. Effective 12:01 a.m. on Tuesday, the local pump prices of gasoline, diesel, and other refined oil products shot up anew for the 11th consecutive week.

The “big 3” along with the rest of the domestic oil industry jacked up their pump prices by P13.15 per liter for diesel; gasoline by P7.10/liter; and kerosene by P10.50/liter. According to the Department of Energy (DOE) data, year-to-date cumulative adjustments stood at a total net increase of P13.25 per liter for gasoline; P17.50 per liter for diesel; and P11.40 per liter for kerosene as of March 8, 2022.

Along the way going home early last night, we passed by several gasoline stations with long queues of cars and other motor vehicles trying to fill their fuel tanks while the pump meters were still at lower prices. The next day, while I was going to The Philippine Star office in Port Area, Manila, I did an ocular monitoring of the prices at each and every gasoline stations that we passed along the same route.

From the survey we did, here are the price lists of the “Big 3” gasoline stations the next day:

Petron – diesel P77.85 per liter; gasoline (Xtra Advance) P79.50; gasoline (CXS) P79.50;

Caltex (Chevron) – diesel P76.95; P77.20 (Silver); P78.20 (Platinum);

Shell – diesel P78.70 (FuelSave); diesel P81.90 (V-Power); gasoline P81.90 (FuelSave); gasoline P86.50 (V-Power Racing).

Depending on locations, these prices of gasoline stations vary even if they have the same brand names. In another Shell gasoline station in Metro Manila, (FuelSave) diesel is sold at P86.30 per liter; VPower is at P93.41; FuelSave gasoline is at P91.04; and VPower gasoline is at P91.70.

Now, compare these price lists in the gasoline stations of the small and medium-sized local refined oil sellers along the same routes:

PTT – unleaded P80.85; gasoline (special) P81.85;

Clean Fuel – diesel P76.60; unleaded gasoline P78.30; premium gasoline P78.80;

Unioil – diesel P77.50; unleaded P79; premium P79.75.

The seeming differences in the prices of gasoline and diesel products obviously range not far from each other. This is supposed to be the effect of the Oil Deregulation Law that encourages competition among the industry players, whether big or small, in terms of their pricing and quality of their products.

If that is the case, how come all the local oil industry players jacked up all their prices at the same time and almost by same amounts of increases in their pump prices?

Except again, Petro Gazz. Effective at 6 a.m. yesterday, Petro Gazz merely implemented half of the announced price hikes of the “big 3” et.al. All Petro Gazz gasoline stations merely raised their pump price of diesel by P6.50 per liter while gasoline at P3.50 per liter. A day after the “big 3” et.al. imposed their price hikes last week, Petro Gazz rolled back by the same amount their pump prices until 12:01 a.m. on Sunday.

Per industry inquiry, Petro Gazz is reportedly owned by the Villavicencio Group of Companies that also owns another independent player FilOil. Unfortunately, their gasoline stations are far and few here in Metro Manila.

For the third time in a span of two weeks, Energy Secretary Alfonso Cusi called for an emergency meeting with the oil industry players last Monday. This was a day before the latest oil price hikes were to take effect. Apparently, Cusi failed to sway oil industry players to his last-ditch attempt to temper, or stagger the amounts of their oil price hikes.

Only last March 4, Cusi sat down and convened the first emergency meeting with the oil industry players at his office. This was after the Brent crude rose to $120 per barrel level before settling at $114 as the war between Russia and Ukraine intensified.

During that first meeting, however, the oil companies reassured the DOE Secretary there is no problem in their supply. “They already have discount programs amounting to P1-4 per liter. We asked them if they can increase (discounts) and the oil companies said they will review this,” Cusi disclosed. A little birdie inside the meeting noted the oil company executives merely looked at each other while Cusi was making the urgent pleas.

Although he is an alter ego of President Duterte, the Energy Secretary apparently lacked the “moral suasion” to sway the oil industry players to his pleas.

The same oil players also participated earlier in the hybrid public hearing of the Senate committee on energy chaired by re-electionist Senator Sherwin Gatchalian. The Senate hearing tackled the review of the 1998 Oil Deregulation Law as well as proposals to suspend the excise tax on gasoline and other refined oil products. Likewise, the efforts of the Senators to intervene and add their “moral suasion” upon the local oil industry players did not bear any immediate relief from their latest price hikes.

Policymakers use “moral suasion,” or jawboning, to persuade others, or a group of people to act a certain way through persuasion rather than force to influence the market and public sentiment. When “moral suasion” strategies are used, it’s typically designed to influence the markets, market participants, and the economy in a positive direction. In strict economic terms, “moral suasion” is a strategy used for the greater good.

Again, methinks it’s about time President Duterte to show his fangs like he did when he demanded better services and more reasonable water rates from the Manila Water and Maynilad under pain of rescinding their concession contract with the government. While indeed the price-setting is beyond the control of the government, this should not stop neither diminish the power of the Chief Executive to act on the obvious abuse of the oil price crisis to further pad the profit margins of oil companies in the Philippines.

It’s time for “jawboning” these oil industry players by no less than President Duterte. Many Filipinos, rich and poor alike, bear the brunt of these unmitigated amounts of oil price increases.