young radicals

Debunking Myths on the RP Oil Crisis

from Vencer Crisostomo's StudentStrike

As the government's "energy summit" starts today, it is becoming more obvious that the government does not really intend to stop the oil price hikes, but instead insists on pursuing foolish efforts pretending to do so. Worse, it wants to address the oil crisis by intensifying liberalization and deregulation schemes -- the same culprits which drove the oil prices to unreasonably high levels during the past decade.

The fact that the summit, with the theme "$100/per barrel, crisis or opportunity", was funded by Asian Development Bank (ADB), the World Bank (WB), the Japan International Cooperation Agency (JICA) and the United States Agency for International Aid -- the same institutions that pushed for deregulation -- tells a lot.

Nothing we can do?

The government's stubborn refusal to address the roots of the crisis banks on the public's misconceptions regarding the oil price hikes. Government representatives and "economic analysts" propagate the false notion that "there is nothing we can do" with regards to the rising oil prices, that it is "inevitable," and that the rise of oil prices is only "natural" as this is what the "world market" dictates.

This line of analysis ignores the studies made by research and consumer groups saying pump prices have been overpriced by as much as P4.50/liter from 2001-2007 and that oil companies engage in price manipulation schemes; the most obvious among which is the automatic price increases implemented as soon as world prices rise, regardless of reserves they have bought before the increase.

According to reports, oil companies get at least P200,000 PER HOUR in super profits from this pump overpricing scheme. This would amount to billions in profits annually at the expense of the consumers. The only "natural" thing about this robbery scheme is that it has been done to us almost on a daily basis for a more than a decade.

Myth: The increases in oil pump prices are justified and are reasonable because world market prices are increasing.

Fact: The oil companies have been overpricing their products and exploiting increases in the world market to rake super profits. We should investigate these and stop the oil companies from unjustly increasing prices.


Crude arguments

As to the argument that "spot market" prices dictate the prices of local petroleum products, this is another part of the quackery the government and oil cartel make up in order to jack up profits. First off, the oil companies do not buy their products from the "spot market," and definitely not in "spot market" price levels. They buy their crude products, in far cheaper prices, from their own mother companies and overprice their products via "transfer pricing" schemes. We must understand that these oil giants monopolize the production process from oil exploration to gas station distribution.

According to studies, only half of the crude prices per barrel amount to the real costs of production; the other half goes to the pockets of the oil giants. No wonder that in 2006, Exxon Mobil, the top among the oil giants, raked $25.3 billion in runaway profits -- the largest among all TNC's ever.

And as if the moral consequences of this plunder isn't enough to bring them all into the dark depths of hell, they even play their little games to artificially and continuously jack up world crude prices in their favor. There isn't really any reason for oil prices to increase as much, for according to the oil crude producers, the supply is stable and there are enough reserves to keep the world turning for another four decades. Speculation -- that game capitalists play to jack up prices, at the expense of the world's peoples -- and the big oil monopolies manipulation of oil supply, are the real evils that cause the skyrocketing world price increases.

Myth: Oil price hikes are inevitable because of the rising costs of crude in the "spot market."

Fact: The rising costs of crude in the world market are mainly speculative and prices are artificially jacked up. Big monopolies are benefiting big time with their evil racketeering schemes.


Crisis or opportunity?

Is there really nothing we could do? Of course not. Fact is that there are alternatives other than energy conservation, liberalizing by tariff reduction, "carpooling" and other idiotic "solutions" that our government wants us to accept.

We should stand up against the plunder being done by these oil giants and bring the prices down to reasonable levels. We should take steps towards nationalizing our oil industry in order to free our economy from its dependence to these profit greedy oil cartels. We must reverse the neoliberal policies which brought us to where we are now.

True, in crisis there is opportunity. But either this becomes an opportunity for us to reform and turn away from the problematic policies we have wrongly embraced, or this becomes an opportunity for the greedy monopolies to further exploit our nation's people and resources. Unfortunately, under this puppet regime, and with the myths its lapdogs continue to propagate, we can expect the latter.
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For more information check out the LFS primer on the oil crisis here.

posted by Vencer @ 3:25 PM