On oil, on all: BSA III useless

DIE HARD III
Herman Tiu Laurel
1/23/2012



Last Wednesday, Jan. 18, newspapers reported Energy Secretary Jose Rene Almendras as saying that government “cannot control” and has “no right to dictate oil prices because that would be tantamount to regulation,” which he argues is “against the law.”

If that were true, then why do we have an energy department at all? The oil companies can have absolute rein on the market, and we can remove all the playacting that government is still there to keep them in check.

The reality is, a Department of Energy (DoE) does exist. It is supposed to be implementing what Almendras mouths as “the law,” which, in plain English, is simply regulation. Government is supposed to regulate by putting up protective measures to help Filipino families and the nation’s economy from suffering economic collapse.

However, Almendras is doing the opposite. By championing deregulation, he wants to ensure that our people continue to remain defenseless against the predatory pricing and market manipulation of transnational oil corporations in cahoots with the local oligarchs.

What is the “market” that Almendras invokes? You will find a thousand ways of defining it, such as from Economy Watch, which says, “a market is an environment that allows buyers and sellers to trade or exchange goods, services and information. These interactions define demand and supply characteristics;” or from Wikipedia, which defines it as “one of many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange.”

Is this like my baker preparing pan de sal that I later buy — end of story? If it were that simple, then there should have been no market chaos in the “deregulated” world economy of the past 20 years that was brought in by the US-UN-promoted free trade and globalization.

If “deregulation” were that great, then why is it that the “regulated” economy of China, with its controlled yuan and state-led system, is doing better than all the rest?

Moreover, is the oil sector of China deregulated? For that matter, is the US oil sector really deregulated? These two countries maintain secret oil stockpiles that extend far into the future to ensure their fuel security.

On June 24, 2011, it was reported in US media that the “US releases oil from stockpiles to aid economy,” spurred by the “Obama administration’s decision… to release 30 million barrels of oil from… emergency stockpiles… designed to bolster the economy and soothe consumers’ concerns amid political unrest in Libya and the Middle East… (which) move coincided with a similar 30 million-barrel release by other International Energy Agency (IEA) member countries… (sending) oil prices to a four-month low in trading…”

Is this an action that characterizes regulation or deregulation? What is clear is that the US government and the IEA do intervene to “bolster the economy… soothe consumers’ concerns… (and send) oil prices to a four-month low…” Now, isn’t that regulation?

Free market apologists will argue that “intervention” is not “regulation;” but intervention is certainly not “deregulation,” at least in the sense that Almendras uses it — that is, never to touch the free market play of oil.

This certainly brings us back to the proposal I have put forward for years now, which is for the Philippines to have a 12-month oil or fuel stockpile bought with excess foreign exchange in the Bangko Sentral ng Pilipinas (BSP) and some in US bonds in the US Treasury, or part of the Special Deposit Account sleeping in the BSP vaults. A solon or two had echoed this same idea; but they were immediately rebuked by Platts oil consultancy, whose “expert,” ironically named Montespeque opined that stockpiling would only raise oil prices and hurt the Philippines.

And so we ask: Are China and the US hurting themselves by stockpiling oil? Wasn’t that June 24, 2011 release by Obama and the IEA of some of this stockpile timed to send “oil prices to a four-month low?”

There are very many forces that actually intervene in the “deregulated” oil market, influencing and turning it to their advantage. Commodities traders buy, sell and resell oil futures while big traders consciously and deliberately influence market prices through their bet placements, pushing up oil prices in cahoots with other players (e.g., global media giants and politicians of the major powers, who create events for the benefit of their finance and oil principals — the major contributors to their political campaigns).

Imagine sheep herders and sheep dogs with tags on them, like “oil giants,” “market speculators,” “oil traders,” “business media wires,” “business cable news,” “US president,” “Israel,” acting in unison, herding the sheep (aka the market) this and that way.

Since late last year up to now, the oil market has been attributing its volatility to the US-Israel vs Iran et al. scenario. Yet there was nary a note from BSA III and Almendras in all that time save for their sudden announcement of ”rationing” oil once a crisis erupts. Aside from this, the Palace has only one other measure, the “Pantawid Pasada,” which one newspaper headlined, “Pantawid Pasada card is free — DoE.”

Well, the measly P300 may be free for the drivers who receive it but it should be made clear that government is budgeting and paying the oil companies for the oil that drivers draw from the cards. It is therefore really not a subsidy for public utility vehicle (PUV) drivers but for the oil companies. And if government cuts the excise tax allegedly to help the public, that is still no help at all as it cuts government revenues, which will then have to be raised somewhere else. It is only the oil companies that win in every one of these scenarios.

BS Aquino III, Almendras, and the DoE are all useless and inutile. They are actually the greatest obstacle to reestablishing a people and economy-friendly oil sector, as well as a regime of people-oriented re-regulation that seeks to dismantle an oligarch-enriching “deregulated regulation.”

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