DoE seeks opinion on oil price controls over local petroleum products
The Department of Energy sought on Monday the opinions of the justice and finance departments for the possible imposition of price control over local petroleum products during the imposition of a state of calamity in the country.
In a briefing on Monday, Energy Secretary Angelo T. Reyes said he had written the two government agencies to ask whether the DOE could implement a price ceiling over these products during a disaster, despite the economic, legal and financial implications of such a move.
“Is the government prepared to subsidize? Can government afford it if we implement a price ceiling? If they want (me to implement it), I will do it immediately,” Reyes said.
The possibility of imposing a price ceiling stemmed from the call of several sectors to put petroleum products under price control, given the massive damage wrought by storm Ondoy and typhoon Pepeng in Luzon.
“While we are anxious to heed the clamor, the Price Act, however, does not expressly mention petroleum products and the Department of Energy as one of the basic commodities and as one of the implementing agencies, respectively,” Reyes noted.
“We want to make sure that any action we shall take on the matter is founded on solid legal footing,” he added.
In his letter (dated Oct. 19) to Justice Secretary Agnes Devanadera, Reyes asked if a price ceiling could be imposed considering the provisions of the law.
Should this be allowed, the energy chief also asked if it would be the DOE or the Department of Trade and Industry that would implement the price ceiling.
Reyes already declared earlier that imposing a price ceiling on petroleum products would go against the Downstream Oil Industry Deregulation Law.
In a separate letter to Finance Secretary Margarito Teves, Reyes said that the “President’s declaration of a national state of calamity has raised expectations of a control of oil prices.”
“Pricing of petroleum products is deemed part of the direct operations of the oil industry. But with petroleum products practically all imported (whether as crude oil or refined petroleum products), controlling prices, i.e., keeping them low, may not be in accord with international prices, which have been very volatile, and in an increasing trend,” Reyes explained in the letter.
He stressed that without any subsidy — if a price ceiling were imposed — the pricing issue could easily become a supply problem.
The energy chief further told Teves that controlling prices or directly taking over the operation of the oil companies would entail cost to the government, if the DOE were to ensure adequate and continuous supply of oil.
“It is therefore in this light that we seek your position on the issue, i.e., whether the government is ready, willing and able to subsidize oil prices at this time of national calamity,” Reyes said in the letter.
Prior to the Oil Deregulation Law, all petroleum products were regulated by the defunct Energy Regulatory Board, where local oil prices were kept low through the Oil Price Stabilization Fund, for which the government had to directly infuse about P14 billion from other government agencies, plus another P4 billion through tax credits.
Economist and Philippine Daily Inquirer columnist Solita Monsod, who was present in the briefing, said she was not in favor of imposing a price ceiling on local petroleum products as this “will result in shortages like mad.”
Monsod served as the Socioeconomic Planning Secretary during the administration of the late former president Corazon C. Aquino.
Petron Corp., meanwhile, said the company would always cooperate with the government in ensuring fair prices for oil products. “We are open to any move by the DOE to ensure that oil prices are fair and reasonable. We have always cooperated with the DOE in the interest of transparency and will continue to do so,” said Petron Corp. president Eric O. Recto.
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