Math of the transport strike today

May 11, 2008 at 11:47 pm Leave a comment

When the Arroyo government allowed jeepney drivers to collect P7.50 as the minimum fare a few years ago, diesel was at P26 per liter. Now diesel costs P42 and the minimum fare is still P7.50. The drivers take a cut in their earnings every time the price of diesel increases.

With the fuel cost jumping by 62% and inflation leaping to a 3-year high, you sometimes wonder how the drivers make both ends meet. If they were owners of IPPs (power generators) they would have simply added the increases in the cost of diesel to the generation charge via the so-called GRAM (or Generation Rate Adjustment Mechanism), and it would all be legal.

But drivers are not as special as the IPPs and they cannot do that without their licenses and franchises revoked. So today they mount a transport strike as a means of redressing their grievances.

But the strange thing — from the point of view of a hard-nosed businessman — is that they are not demanding an increase in the minimum fare!. Why? As PISTON spokesman George San Mateo explained it in the presscon last Saturday, they do not want to add to the burden of the people by charging higher new minimum fare.

Instead they want to have diesel at reduced prices by asking Arroyo to remove the taxes and tariffs on diesel and related products. That would reduce in a big way the cost of diesel, and drivers can recover some amount of their previous incomes. They also want the oil deregulation law scrapped.

Graphically:

Min.fare  –  Cost of diesel
P7.50  –  P26 – a few years ago
P7.50  –  P42 – today
0 – increase in minimum fare
+ 16 – increase in cost of diesel (62%)
^
^ – meantime, cost of living has made a quantum leap

At least P10 — cost could be reduced If taxes and tariffs are removed

Will Arroyo understand the simple math? Or will she wait for drivers to be driven to use more forceful ways to redress their grievances before she understands the very simple math?

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