EDITORIAL - Regime of instability

Every time there’s sharp volatility in global crude oil prices, someone suggests an end to oil deregulation in the Philippines. The Arroyo administration, even at the depths of its unpopularity, resisted the temptation to revive oil subsidies, and price volatilities eventually passed.

The proposal has been resurrected again as unrest, often violent, continues to rock major oil-producing countries in the Arab world. So far the Aquino administration has resisted the proposal, although it has approved a temporary subsidy for public transport operators and drivers. The beneficiaries sneered at the subsidy but did not reject it.

Energy officials are monitoring local pump prices and are threatening action against oil companies for undue price increases. But the officials also emphasized the need to balance the interests of the public, the transport sector and investors.

In case the administration is tempted to give in to demands for an end to deregulation, it should remember what it was like in a subsidized regime when local pump pricing was politicized. The subsidies mostly on diesel, charged to taxpayers, certainly benefited marginalized public transport operators. But they also benefited the major operators as well as the owners of diesel-powered luxury sport utility vehicles and Mercedes Benzes, all of whom could very well afford to buy fuel at non-subsidized rates.

With pricing politicized, Mala-cañang won brownie points for every fuel price cut, but reaped opprobrium and risked mass protests for every increase. Does the Aquino administration want a return to this regime of instability? That same environment spelled disaster for the energy industry, and the country continues to face the consequences, with experts warning of a looming energy crisis this year.

People only have to watch the news on TV to see that crude oil prices are being pushed up by political instability in the Middle East and North Africa. The Philippines cannot stop world oil price movements, but there are ways to cushion their impact on the very poor until the crisis has subsided, without throwing local market forces awry and paying a steep price for it. Oil supply always stabilizes eventually. Whoever emerges victorious in ongoing conflicts in the Arab world, they will have to sell their oil.