Palace downplays its 'family feud' over oil prices

MANILA, Philippines - Malacañang has described the word war between two cabinet secretaries as a “normal family matter." But analysts have begged to differ. The “family feud" between Socioeconomic Planning Secretary Ralph Recto and Energy Secretary Angelo Reyes regarding the “correct" price of oil reflected President Gloria Macapagal-Arroyo’s “poor leadership." While one analyst said that Recto was doing the right thing in disputing oil companies’ rate hikes, another claimed that Reyes alone has the right to speak about fuel prices. The Energy chief, a former general and a defense secretary, accused Recto of using fuel price increases as media mileage for his suspected election bid. Recto, on the other hand, insisted that Reyes should stop grumbling about his comments and stay focused on “addressing oil price volatility." “Recto may have [political motivation] in saying the oil firms are guilty of overpricing, but it does not mean that he is wrong," political analyst Benito Lim told GMANews.TV. But economist Victor Abola of the University of Asia & the Pacific said although it was “easy" to say that oil firms were “overpricing," it would be difficult to prove the claim. “Oil pricing is a very specialized area," Abola said, adding that the Department of Energy should be the sole agency commenting about the matter. Fuel companies have been slow in adjusting prices, whether upwards or downwards, Abola said. Despite their differences, both analysts agreed that the feud showed that the President was not as “focused" on the economy as she was claiming. “This issue strikes at the country’s economic policy. If her cabinet, especially her economic managers, disagree on something like that, it only means that she’s not paying enough attention to the economy," said Lim. “Feuding is not a good policy. It means you’re not conducting your governance properly. She should have stepped in to prevent the fight," Abola added. In the meantime, how important is it for the country to determine the correct price of fuel? Sources from the Development Budget Coordinating Committee (DBCC) said that it was the DOE which pushed for the higher peg of oil prices for the year. The Bangko Sentral ng Pilipinas had reportedly sought to peg oil prices at $45 to $60 per barrel, but ironically, it was the DOE which pushed for a higher estimate at between $50 and $70 a barrel. In the end, the DOE got its way. Oil prices have been the major reason for the 9.3-percent hike in consumer prices last year, as crude oil hit a record of $147 a barrel in July. It pushed the August 2008 inflation at 12.5 percent, a 17-year high. Inflation, which directly affects consumers’ inclination to spend, is being eyed to stay between 2.5 percent and 4.5 percent. For the year’s first three months, the economy expanded by 0.4-percent, which was disappointing because the government was previously aiming for a 3.1 to 4.1-percent growth this year. Manila had been banking on consumption to support the economy's growth as remittances continued to grow by 2.98 percent to $4.06 billion. For every peso of OFW remittances, P2.50 worth of income in the economy is generated. However, personal consumption expenditure only improved by 0.8 percent, as expenses for tobacco contracted by 38.7 percent; clothing and footwear, 24.8 percent; and beverages, 11 percent. Instead of spending their time bickering, the two economic managers should spend more time to ensure economic growth because consumers were already suffering, Lim said. However, it was unclear if the feud would end soon. Before leaving to accompany the President to her Japan trip, Recto was cryptic about how he assessed Reyes’ performance as DOE chief. “I'm not saying that he [Reyes] is incompetent," Recto said. Asked whether it meant, Reyes was competent, Recto smiled and repeated, “I'm not saying he's incompetent". Refusing to be outdone, on Thursday, Reyes said Recto just wanted to be “popular." Recto lost his senatorial bid in 2007 after becoming unpopular among voters owing to his authorship of the law which jacked up value-added tax to 12 percent from 10 percent. He is expected to run for the Senate again next year. - GMANews.TV