Is the H1N1 vaccine safe?
BY PHILIP S. CHUA M.D FACS, FPCS
The government will blink
‘The government will have to blink if there’s any sanity left in the leadership.’
MALACAÑANG yesterday said Gloria Arroyo will not succumb to pressure and threats of an "artificial" shortage of oil products arising from the price freeze under Executive Order 839. Brave words. But when the gasoline stations in Metro Manila and other parts of Luzon start running out of the stuff, as they inevitably will, what could the government do except rescind that executive order?
We are prepared to make a modest wager with that factotum in Malacañang who even in the twilight of the Arroyo administration never tires of seeking to refurbish the tattered image of his principal. We bet EO 289 will be lifted within two weeks, not because of threats of an "artificial" shortage of oil products but because of a real absence of fuel at the pump.
As early as next week, the small independent players will only have gas fumes in their inventory for the very simple reason that they have not been contracting for new supplies from abroad at a cost they could not recover.
Concededly, government has the power to freeze prices of basic commodities during a time of emergency. This power, again concededly, extends to the confiscation of such a commodity. But when there is nothing to confiscate, invoking emergency state powers is an exercise in fatuousness.
Now, the question: Does the government have the power to order the oil companies to replenish supply which they can only sell at a loss? Perhaps it does. But there’s no law stopping any businessman from leaving a losing business.
All oil companies have complied with the order to retain prices at October 15 levels. They are selling their old stocks at losing prices. The small players, however, generally have an inventory good only for two weeks. Those two weeks are up. They have nothing more to sell after that.
The refiners are traditionally held to have a 60-day inventory. But this includes crude oil in transit which we suspect has already been diverted elsewhere where it will generate a little profit or where losses are smaller compared to refining and selling the products locally.
And that generic term "refiners" with high inventories remain subject to qualification. Petron, the biggest, has at times been maintaining a stockpile of less than 30 days. It expects to lose P1.5 billion if the price freeze continues until the end of the year. So guess where its inventory level is now: higher or lower than historic average? The one who gives the right answer gets no cigar.
Pilipinas Shell has long been running its refinery intermittently. It imports finished products any time regional prices, specifically Singapore’s, are below cost of imported crude cost plus refining expenses.
We are sure the technical people at the Department of Energy have a fairly good idea of how much oil products there is in the depots and the gasoline station. The inventory is being run down very fast.
As we said the crunch could come as early as next week. The government will blink, will have to blink if there’s any sanity left in the leadership.