Price spiral

This will be a difficult yearend holiday for ordinary consumers. Prices of essential goods have gone up or will soon go up. We are referring in particular to electricity and fuel, two major inputs of production to most manufacturers. Any increase in their prices will have a domino effect on the prices of other essential commodities, including sugar, milk, canned goods and basic services like mass transportation.

Manila Electric Co. (Meralco) has given notice that consumers in its franchise area will receive higher electricity bills starting this month as a result of the Nov. 11-Dec. 10 maintenance shutdown of the Malampaya natural gas platform that fuels three power plants in Luzon. The shutdown has pushed power-generation firms in the Luzon grid to use more expensive fuel. This fuel shift is estimated to result in a potential increase of P3.397 a kilowatt-hour (kWh) in the generation charge for the month of December, according to Meralco. Such an increase in the generation charge will raise the bill of a household consuming 200 kWh a month by more than P500. Meralco said the increase would be reflected in the January-February 2014 customer billings. The generation charge accounts for the cost of electricity that Meralco buys for distribution to its franchise area, which covers 31 cities and 80 municipalities in Metro Manila and the provinces of Bulacan, Rizal and Cavite, as well as parts of the provinces of Laguna, Quezon, Batangas and Pampanga. Meralco’s service area produces nearly half of the Philippines’ gross domestic product (GDP) and is home to 24.7 million people, or a quarter of the population.

The price of liquefied petroleum gas, the main fuel used by many households for cooking, has also risen by as much as P14.30 a kilo since Dec. 2. This was the biggest-ever increase in the price of LPG. Increases in the prices of diesel, gasoline, and kerosene followed suit on Dec. 3. Auto LPG, which runs a big chunk of the taxis in the metropolis, also saw an increase of P7.99 a liter.

The LPG price increase was reportedly caused by a tight global supply combined with a high demand for heating fuel in Europe and North Asia going into the winter season, according to the Department of Energy. For this month, the price of LPG ranges from P842 to P965 for an 11-kg cylinder tank from the previous P680 to P760. “It’s the highest increase but not the highest price. The highest retail price was in March 2012, and that was due to an extended winter,” Energy Secretary Carlos Jericho Petilla said. That record price he was citing was close to P1,000 for an 11-kg cylinder, and we’re nearing that level with more than two months more of winter left in North America, Europe and North Asia.

The fares for the MRT and LRT lines are also going up, possibly early next year. The government is considering a P10 increase for Metro Manila’s overhead train system, most likely to be implemented in installments.

The Philippines imports practically all its fuel requirements and is therefore helpless against increases in oil prices that are either caused by supply constraints or increased demand, or even geopolitical disturbances. With the deregulation of the oil industry in the 1990s, the government can do nothing to stop petroleum companies from adjusting their pump prices to reflect the international cost of oil products.

Consumer groups can protest all they want and file petitions with the Energy Regulatory Commission against the impending increase in electricity rates, with the Department of Energy to complain about pump prices of petroleum products, and with the Land Transportation Franchising and Regulatory Board on issues relating to transport fares. But, again, these agencies are hardly of any help to consumers insofar as stopping price increases is concerned.

All we can do is appeal to the kind hearts of power companies, petroleum dealers and manufacturers of essential commodities to temper—if they can’t stop altogether—any impending increase in the prices of their products. We can appeal to them that profit should not be the ultimate goal or consideration of their existence in society. We can tell them that consumers are human beings who deserve compassion, especially this Yuletide season, which is more—or should be—a time of giving than receiving. And we can remind them that ours is a country still in a state of national calamity.