PRIOR to her last State of the Nation address, President Macapagal-Arroyo was said to have pressured the oil companies to roll back oil prices, to sweeten the public mood going into her speech. The oil companies reportedly complied, but only after grudgingly vowing this would be the last time she would be able to do that. Everyone knows the President isn’t shy about using consumerism as a populist tool to shore up her sagging popularity. What she did to the oil companies she did to the telecommunications companies by pulling a stunt concerning text messaging in her national address, turning an ongoing promo on the part of some telcos into an administration achievement.

This is not to say that the President was incorrect to pressure the oil companies to reduce—but not curtail—their profits, but merely to turn obscene profits into extremely large ones. And this is not to say that using government’s regulatory and other powers—including that of moral suasion—to accomplish oil, gas and transport fare rollbacks is wrong. Far from it. But it is to point out that this administration is not unique in viewing such things from the perspective of the political benefits such actions, and their timing, can produce.

Going into the holidays, the President herself has focused speaking out on consumer-related costs, mainly in terms of food, such as the cost of flour. Her subordinates have taken up the task of castigating the oil companies for what it has declared to be the foot-dragging of the oil firms in reducing the price of oil to reflect the drop in oil prices in the world market. Oil, over the weekend, dropped to price levels not seen since three years ago. A world that had been conditioning itself to consider $100-per-barrel oil a permanent probability has seen oil prices drop to $50 a barrel in reaction to the contraction of the global economy.

The oil companies have rolled back prices from P1 to P2.50 a liter; they say the drop could have been as much as P5 a liter if it weren’t for the ongoing depreciation of our national currency. But Ralph Recto, the National Economic and Development Authority chief, says the price rollback should in fact be P8 to P9.

What is interesting is that Recto tried to meet with the Independent Philippine Petroleum Companies Association (IPPCA), composed of Flying V, Eastern Petroleum, City Oil, Unioil, Seaoil, Filpride Energy Corp. and Filoil. These companies, while accounting for a small market share of the oil business in our country, play an important role because of their willingness and ability to undercut the prices of the big players, including Petron, Shell and Chevron. At times they have been more nimble in adjusting to changes in the global price for oil, and when they cut prices the big players, much to their chagrin, have to consider at least partially following suit. But when Recto met with the small players, at their behest, he says, because they were concerned about the government’s computation of oil prices, they rebuffed his overtures for them to lower rates.

Recto says that if oil companies use the world market price of $56 per barrel and an exchange rate of P49.32 to the US dollar, then diesel prices should be brought down to P31.77 a liter while gasoline should be at P35.86 a liter. Last month, Recto’s oil price estimates were based on a cost of $70 a barrel, and at the time said retail pump prices in the Philippines should’ve been at P35.32 a liter for diesel and P40.95 a liter for gasoline. Speaking for the small players, Ramon Villavicencio of Flying V said they were operating from a $66 to $67 price range per barrel of oil (MOPS), and that the retail price of P36 to P37 a liter of diesel was the right price. Both large and small players have tried to temper the public mood by dangling the prospect of bigger rollbacks by December of this year or January next year.

There is of course the problem that oil bought today for a certain price reaches the Philippines and can be sold to the consumer only some time later. The oil companies, big and small, insist they are entitled to recoup the actual costs of the oil they sell, even if the sales take place when the world market prices are much cheaper. But the public doesn’t often think about this time lag nor, perhaps, does the government view it politic to factor this when it engages in populist-oriented pressuring of the oil companies. If the oil companies, as an industry, also bear a personal grudge against the President for the little public-relations stunt she pulled last July, it only makes things worse for the consumer, caught in a power play between the government and the oil companies.