DOE orders oil firms: Unbundle pump prices

MANILA, Philippines — What’s the basis for oil companies to charge as much as P170 per liter on products like premium diesel and kerosene?

Next week, the public may finally get their answer as the Department of Energy (DOE) has ordered oil industry players to unbundle fuel prices.

Energy Secretary Sharon Garin cited as legal basis a Supreme Court (SC) ruling that affirmed the agency’s 2019 circular mandating companies to submit a detailed breakdown of the cost components of their products to the Oil Industry Management Bureau.

Add to the fact, she said, that the Philippines is currently under a state of national energy emergency.

“We issued guidelines a few weeks ago and when the President initiated the emergency powers, we sent an advisory to all the oil companies to send us their unbundled prices,” Garin told True FM yesterday.

“So, we’re just waiting from this week to next week on what will be submitted,” she said.

Non-submission of unbundled prices, Garin said, could lead to the cancellation of firms’ DOE permits, especially if they provide unjustified reasons. “But I’m confident that they will comply with our orders,” she added.

Pump prices have risen in the Philippines much faster than in most countries in the world, according to data from Global Petrol Prices.

Over the past three months, the price of diesel has skyrocketed by 135 percent and gasoline by 61.5 percent, both the fourth-fastest in the world.

When it comes to diesel, only Laos, Vietnam and Myanmar have much larger increases.

Oil players have been receiving accusations that they continuously reap profits amid the crisis. Sen. Rodante Marcoleta, for instance, claimed they are earning P3 billion daily by selling inventories at high prices despite being purchased at low rates.

Progressive group Bayan Muna, through its chairman Neri Colmenares, already submitted a letter to the DOE asking it to oblige oil players to unbundle pump prices.

The former lawmaker does not believe firms only consider market forces when setting fuel prices, as their costs also include “salaries for their top executives and profit margins.”

In upholding Department Circular 2019-05-0008, the SC rejected arguments by petitioners Philippine Institute of Petroleum Inc., Isla LPG Corp., PTT Philippines Corp. and Total Philippines Corp. that the DOE is unauthorized to ask for a detailed breakdown, especially on matters considered trade secrets. They argued that unbundling would erase whatever advantage they have against their competitors.

“We find it hard to believe that the prices these oil companies release are merely made up out of the blue and without any basis at all; verily, there is a systematic calculation or process on how they set their prices, and it is such information that the DOE needs to collect in order for it to accomplish its mandate under Republic Act 8479 (Downstream Oil Deregulation Law),” the high court’s First Division stated in its ruling.

The breakdown of pump prices is of “public interest,” the law provides, with trade secrets protected from public release due to their confidential nature.

Rollback

A rollback in diesel prices may finally come next week, the first in over three months or since Dec. 30, 2025.

After five rounds of double-digit hikes spurred by the Middle East crisis, diesel prices are estimated to drop by P2.50 to P3.50 per liter next week, an industry source told The STAR.

Gasoline prices, meanwhile, may either remain unchanged or see a rollback of P1 per liter.

The estimated movements in domestic prices were based on the first three days of trading in the Mean of Platts Singapore (MOPS). With two trading days remaining, fuel prices could still rise or fall.

“MOPS prices and premiums have softened due to the ceasefire deal in the Middle East. However, modest rebounds are seen based on (yesterday’s) projections,” the source said.

Since the Middle East war erupted in late February, kerosene and premium diesel prices have climbed to as high as P170 per liter, while gasoline is nearing the P120-per-liter mark.

No rationing

Meanwhile, Garin said the government is not considering fuel rationing as part of measures to extend the country’s supply amid ongoing Mideast conflict.

“No, we never discuss it, we haven’t considered it,” Garin said at a Palace briefing when asked about the proposal. “What we have issued as the directive from DOE is no hoarding.”

Garin stressed the DOE is strictly monitoring gas stations and oil firms to prevent profiteering and hoarding, noting that oil companies are submitting weekly reports to the agency detailing their price adjustments and the reasons behind them.

Meanwhile, House lawmakers will summon oil industry players to address concerns over their “cartel-like” behavior in fuel pricing amid tightening petroleum supply due the ongoing conflict in the Middle East, Marikina Rep. Miro Quimbo said yesterday.

Quimbo, chairman of the House committee on ways and means and presiding officer of the House’s Legislative Energy Action Development Council, said oil companies will be asked to explain why their prices move almost exactly the same, even in a deregulated market.

“Yes, yes, definitely. We will ask them,” Quimbo said when asked in a radio interview if oil companies would be invited to the hearings.

During the House panel hearing last Wednesday, Quimbo raised the issue with Economic Planning Secretary Arsenio Balisacan, who said markets with only a few dominant players are more likely to move together.

“In Economics 101, Mr. Chair, when there are very few players in the markets, and you ask these players, government may be asking them to cooperate, to coordinate, they are actually asking a cartel,” Balisacan said, adding that he was not concluding that a cartel exists, but urged regulators to take a closer look. — Jose Rodel Clapano, Brix Lelis, Helen Flores