Lawmakers seek amendments to Oil Deregulation Law

MANILA, Philippines — Lawmakers in the House of Representatives have pushed for amendments in the Oil Deregulation Law amid unrestrained oil price hikes in the country.

In a virtual hearing last Friday, the committee on energy tackled the bills seeking to amend Section 14 of Republic Act 8479 or the Downstream Oil Industry Deregulation Act of 1998 filed by Baguio City Rep. Mark Go and “power bloc” party-list Reps. Presley de Jesus of PHILRECA, Sergio Dagooc of APEC, Godofredo Guya of RECOBODA and Adriano Ebcas of AKO PADAYON.

House Bills 5172 and 7928 both seek to expand the mandate of the Department of Energy to ensure more transparency in the variable pricing of fuel and petroleum products.

Go cited the need to amend the law, saying it has not been effective in ensuring  fair pricing to the detriment of consumers.

“The Oil Deregulation Law sought to encourage competition, incentivize investments and provide the public greater access to clean and high-quality oil products at fair prices. Two decades since the enactment of the law, and we continue to observe how the lack of transparency in this highly liberalized system can become so prone to abused practices and anti-competitive behavior,” he said.

Marikina Rep. Stella Quimbo agreed on the need for a more effective government monitoring of pump prices after DOE officials admitted during the hearing that they are helpless in keeping pump prices at competitive levels, and oil companies have unrestrained powers in setting pump prices.

Quimbo said she was puzzled by the spike in fuel prices since the drone attacks on the two oil facilities of Saudi Arabia in September 2019 despite oil companies admitting they having enough fuel supply after the attacks.

“I found this a curiosity considering the companies should have had enough stock purchased at previous lower price levels. And if that were indeed the case, price levels should not have increased that soon as a result of the drone attacks,” said Quimbo, an economist by profession.

DOE Oil Industry Management Bureau director Rino Abad explained to lawmakers that the agency has no power and control on pricing as the Oil Deregulation Law does not provide a specific formula.

Abad said oil companies “could do adjustment any day they want” and that “they could also compute the adjustment anyhow they want, that is the essence of the Oil Deregulation Act.”

Lawmakers then vowed to look into the proposed amendment to RA 8479 to address this loophole.

They stressed that the law was enacted in 1998 not only to liberalize the downstream oil industry so that firms can adjust prices smoothly when necessary but also to promote fair trade practices.

“It’s about time that we change the way of monitoring fuel prices. The current method of pump price monitoring by way of a formula based on the MOPS is not effective. Once price increases in the world market, the prices here in the Philippines also immediately increase even if the oil firms sell old stocks from previous lower prices,” Quimbo said.

The economist-lawmaker suggested that instead of a price formula, the government may consider using technology in monitoring prices such as the one being used by mobile application Waze “so there  will be different prices adjustments and we can ensure competition in the market.”

Quimbo also proposed that DOE and the Philippine Competition Commission join hands in monitoring pump prices.

The House hearing came after oil companies increased diesel prices by P0.30 per liter and P0.45 per liter for gasoline products last Jan. 5, just a month after the big-time price increase of P1.15 per liter of gasoline last Dec. 1.