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The Philippines’ President Gloria Arroyo has signed Executive Order 839.   This Executive Order mean for prices of oil in areas ravaged by typhoon in the Philippines to be fixed.

In so doing, the astute politician in Arroyo trumped her PhD in Economics.  Naturally, business groups in the Philippines want fuel price freeze lifted.

The price and supply of oil is hotly debated the world over.  Just look at this chart which you can find from oil analyst gregor.us:

Just so we’re on the same page, December delivery of oil, as of this writing is at US$77.43 a barrel.

Philippine journalist Ricky Carandang wrote in his blog that Arroyo repealed the law of supply and demand and argued that:

the Arroyo regime continues to force pump prices at levels below the market price, it will eventually lead to a shortage.  And that’s what we’re begining to see. Gas stations may not call it that, but they are already rationing fuel and are now threatening to stop importing altogether.

How then can one do business in the Philippines when the law says the Oil Industry is a deregulated market and government itself does another?

Oil companies are under threat to be sued under economic sabotage.  If there is anyone that needs to get sued, under economic sabotage it is Gloria Arroyo and this economic self destructive policy.

What if Executive Order 839 isn’t about the price of oil or its supply?

EO 839 is a populist move.   It is easy enough to see that this is done under the guise of compassion, “to protect the poor” and victims of the recent typhoons from market forces.   It is a false oasis.  This road leads only to greater hardship down the road.  It appeals to shortsightedness and reveal greater uncertainty in the market place.  In fact, EO 839 only strengthens the perception that the Philippines is unstable and that the law is bendable at any given time.    If the Philippines was at all serious about solving its energy problem, then it should accelerate plans to be less oil dependent.  That is what a responsible economic manager ought to be pursuing.

What if this has little to do with the Price of Oil or about rebuilding the damage of the recent typhoons?  What if this has nothing to do with improving the lives of Filipinos ravaged by typhoon and poverty?  With Arroyo, by law, set to complete her term of office by June 2010, and her party’s candidate trailing surveys, is it a stretch to say that this is a scorch earth strategy to make it difficult for the next president to do anything at all?