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Fuel conservation measures proposed
Felipe F. Salvosa II, BusinessWorld (10 Aug 2004)

MANILA, PHILIPPINES: Businessman Raul T. Concepcion yesterday called on Congress to grant special powers to president Gloria Macapagal Arroyo, saying there was a need to impose energy conservation measures to mitigate rising oil prices in the world market.

Mr. Concepcion told reporters that higher fuel costs have led to a 20% increase in the prices of plastic-based products.

Other raw materials such as steel, aluminum, and urea, are expected to follow suit, he said.

Ahead of tomorrow's National Price Coordinating Council meeting, the head of the private sector Consumer and Oil Price Watch, however, clarified that prices of basic goods such as rice were not likely to be affected by rising oil prices.

Mr. Concepcion said prices would only increase beginning October, but this is when consumption historically goes up in anticipation of the Christmas season.

"I don't expect prices to go up, because supply is greater than demand," Mr. Concepcion said. "But for manufactured products, that's another story."

Trade officials have downplayed the effect of rising oil prices on basic goods, saying transportation constitutes only 2%-5% of total costs incurred by manufacturers.

The latest report by government monitoring teams showed price increases of over 6% for canned sardines from last month's figures. The 155-gram Ligo sardines costs 5.56% more at PhP9.50, while the Master brand became more expensive by 5.88% to PhP9. Hakata sells for PhP8.50, up by 6.25% from a month ago. The 200-gram Philips meatloaf costs 5.56% more at PhP19. Alaska condensed and evaporated milk sells for PhP33 and PhP27, respectively, up by more than 3%.

Trade officials had attributed higher canned goods prices to higher tinplate prices in the world market.

And to conserve fuel, Mr. Concepcion said the government must discourage the purchase of sport utility vehicles or SUVs that consume a huge amount of fuel.

He suggested higher taxes on luxury vehicles and a 500% increase in motor vehicle registration fees for SUVs.

Incentives should also be given to activities such as car pooling, Mr. Concepcion said.

The consumer advocate advised the president to be forthright on the current economic situation. "Just tell the people the way it is. You cannot hide it," he said.

Mr. Concepcion pointed out that if fuel prices would continue to go up, wages and transport fare would have to adjust. "At the end of the day that translates to one thing -- layoffs," he said.

Mr. Concepcion thus urged the Arroyo administration to go slow in proposing new taxes on businesses and to try to efficiently collect existing taxes first. "If we find that that's not enough, then that's the time we should impose new taxes," he said.

Copyright © 2004 BusinessWorld Online, Inc. ALL RIGHTS RESERVED.

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