Oil Cartel? Just Live With It

News reports have it today that representatives of transport groups and oil companies have exchanged heated words in a consultative meeting facilitated by the Department of Energy.

The transport groups demanded another round of rollback of prices of oil products considering the continuing drop in the average price of petroleum in the world markets. From a high of USD 145 per barrel six months ago, crude oil now sells at USD 86 a barrel. The Philippine oil companies have at various rates rolled the prices of their oil products down at least 13 times already since August this year.

However, despite what seems to be a valid ground for such a demand, the oil companies insisted that cost considerations do not warrant any further price downward adjustments. One representative even explained that no amount of threats from transport groups to wage massive strikes can change the operating limits there are to the demanded price rollback.

Such a dialogue has been taking place in government regulating bodies since the time I don’t think anyone would care to remember. Why would such confrontations be important? Same tales of woes, same lines of reasoning, same results: neither government nor business can do something about easing the people’s burden with respect to the high cost of oil. People just have to live by what the market dictates. Those who make their complaints known about the oil cartel in the Philippines dictating market behavior should have understood the futility of their effort.

Even the government—during the Marcos dictatorship—tried to challenge that cartel. It put up a government corporation, Petron, to serve as counterweight to the excesses of the cartel. The cartel devoured Petron and became part of the cartel itself. What happened was one more case of an ogre that never dies.

So what are we to do? Obviously the most practical way is to do nothing; just live it and trust that everybody will at one point in their lives come to think about the afterlife.

The emergence of small players in the oil industry has yet to get the attention that Petron once got from the ogre. When they do get to reach that point one can assume that they might be important enough to become part of the league—and forget what the heck are hecklers have to say about cartel.

Nevertheless, there is a time for consumers to claim one fleeting victory while the whole ogre-making process is taking place. Transport groups for example can buy their entire inventory from the small players while the latter remain outside of the league and therefore continue to put up some semblance of competition. Cannot be done?

Those who shake their heads are proof that some are less smart than others.