Follow mandated price rollbacks, oil firms told

MANILA, Philippines — Oil firms are under orders against imposing excessive price hikes, Energy Secretary Sharon Garin said, even as the sharpest pump price cuts in weeks since the easing of tension in the Middle East are set to take effect today.

“The people’s clamor was, ‘why are the increases faster than the rollbacks?’ So we have decided to closely monitor the adjustments,” Garin told a press briefing yesterday.

She said President Marcos’ declaring a national energy emergency has empowered the Department of Energy to set a cap on price increases and to limit rollbacks.

The energy chief clarified that the move is “not an arbitrary price control,” stressing that the government is merely regulating price movements.

Starting today, as announced by the President, diesel, gasoline and kerosene prices are set to drop by at least P24.94, P3.41 and P2 per liter, respectively.

This marks the second straight week of rollbacks following a series of steep increases that pushed domestic pump prices to historic highs.

“The DOE, with the issuance of Executive Order 110 by the President, has more control over the industry. But we are not taking over any industry, any business or any operations. What we are more focused on is the price,” Garin said.

Under the Oil Deregulation Law of 1998, the DOE may “temporarily take over or direct the operation” of oil industry players in times of national emergency.

Oil firms that fail to comply with the fuel price mandate face penalties of three months to one year imprisonment and fines ranging from P50,000 to P300,000, DOE director Rino Abad warned.

The remaining batches of diesel buffer stock ordered by the state-run Philippine National Oil Co. (PNOC) will arrive today and on Friday, according to the DOE.

A shipment of around 320,000 barrels will arrive today at the Subic terminal of the Philippine Coastal Storage and Pipeline Corp., according to Energy Undersecretary Alessandro Sales.

The fourth and last batch of 300,000 barrels, Sales added, would be delivered on April 24 at the depot of Insular Oil Corp. in Davao City. The state-run enterprise bought this shipment from international trader Vitol.

LPG arriving

In addition, 21,000 metric tons of liquefied petroleum gas (LPG) buffer stock will arrive between the third and last week of May. Sales said the delivery will come from the US, passing through Singapore.

Gasoline has 54.47 days’ worth of stocks, while diesel has 50.13 days; kerosene, 129.93 days; jet fuel, 60.69 days, fuel oil, 78.87 days and LPG, 40.26 days.

“Our stocks are steady because there is steady delivery of all sorts of fuel. And also, there has been a significant drop in the consumption of fuel in the whole country,” Garin said.

“It’s only two days, but that already shows an increase, especially for diesel and LPG. That is a big help for the DOE’s projections,” she said. “And our consumption is not increasing…

“Filipinos are consciously starting to save fuel. The work-from-home, carpooling and all other measures that we have been practicing – whether as a government or public sector, in private, in business or even in the households – have been very effective in making sure that we prolong and protect our inventory levels,” the DOE chief maintained.

She said the PNOC cannot procure as much reserves as it would like because the government has no fuel storage facilities of its own since the enactment in 1998 of the Downstream Oil Deregulation Law.

The DOE recently ordered oil players to report unused storage facilities that the PNOC can utilize if it wants to procure additional buffer stocks.

The DOE chief added that any plans to establish a strategic petroleum reserve will have to start with amending the oil deregulation law.

“It cannot be only done with an energy emergency issuance because that’s temporary,” Garin, a former party-list representative, said. “If we want a strategic petroleum reserve, it has to exist beyond the period of the emergency.

“It really needs legislative or legal backing for this decision. At the same time, it will require funding also,” she stressed.

‘Oil Deregulation Law repeal unlikely’

The House of Representatives is unlikely to repeal the Oil Deregulation Law under Republic Act 8479, according to Rep. Miro Quimbo, who chairs the House legislative energy action and development joint committee.

“Going back to a regulated setup is a step back to the dark ages. Had the current crisis happened under a regulated regime, we would be worse off,” Quimbo told The STAR.

“Rationing would be happening and the government will be close to bankruptcy because of excessive oil subsidies. So we cannot go back to that system. But we need to be able to temper the laissez-faire (leave it be) setup that the oil industry is enjoying currently,” he clarified.

Meanwhile, Sen. Sherwin Gatchalian said even if local pump prices are dropping due to international ceasefire negotiations, the DOE needs to continue investigating possible profiteering by oil companies. — EJ Macababbad, Delon Porcalla, Neil Jayson Servallos