Malacañang Blunting Calls to Regulate Oil Industry

Published on March 28, 2009

In response to the growing clamor for the scrapping of RA 8479 or the Downstream Oil Industry Deregulation Act of 1998, the House Oversight committee is, instead, pushing for its amendment. These developments should make consumers wary because these blunt calls to junk RA 8479 and to establish an entirely new set of measures to effectively regulate the downstream oil industry.

BY ARNOLD PADILLA
Contributor
Bulatlat

A think tank based at the House of Representatives, the Congressional Planning and Budget Department (CPBD), released a report, March 24, upholding Republic Act (RA) 8479 or the Downstream Oil Industry Deregulation Act of 1998. The report, written by CPBD director general Rodolfo Vicerra warned that without RA 8479, the domestic oil market would need price intervention and taxpayers would have to bear the burden of keeping oil prices stable. The CPBD report argued that scrapping the oil deregulation law “would require reviving the Oil Price Stabilization (OPSF) to be funded again by taxpayers”.

On the same day that the CPBD report was released to the media, the Big Three (Petron Corp, Pilipinas Shell, and Chevron Philippines) has again hiked their gasoline prices by P1 a liter, and kerosene and diesel by 50 centavos. The price increases followed a 30 centavo-hike in diesel prices implemented by the same firms four days earlier, citing increasing prices in the global oil market.

The recent rounds of oil price hikes further amplified persistent calls to repeal or at least amend RA 8479. The House Oversight committee chaired by Representative Danilo Suarez (Quezon province, 3rd district, KAMPI) is pushing for the amendment of RA 8479. Suarez said he and House Energy Committee Chairman Rep. Mikey Arroyo (Pampanga, 2nd district, LAKAS-CMD) are crafting a bill that will “partially” regulate the downstream oil industry. The bill, according to Rep. Suarez, would focus on regulating pump prices, controlling oil imports and limiting industry participants.

The details of Suarez’s bill remain sketchy at this point, and his proposal for partial regulation is vague. Nonetheless, some quarters have expressed opposition to moves to scrap RA 8479 in its entirety and have instead pushed for amendments supposedly to plug its loopholes and prevent excessive and predatory pricing. This is the official position of the Department of Energy (DOE), and, by extension, of Malacañang. This explains the initiatives to amend RA 8479 being pushed by Representatives. Suarez and Arroyo. These developments should make consumers wary because they blunt calls to junk RA 8479 and to establish an entirely new set of measures to effectively regulate the downstream oil industry.

OPSF

A misleading and often recycled argument against proposals to regulate the country’s downstream oil industry is the discredited OPSF. Aside from the CPBD, the DOE has also raised the OPSF as an issue to thwart calls for regulation. Energy Department’s Oil Industry Management Bureau (OIMB) chief Zenaida Monsada said that government “should be cautious about reverting to a regulated system as it could not afford reviving the OPSF” which “cost the country a lot of money”. In 2005, the DOE formed an “independent” body to review RA 8479 and among its findings was that “subsidizing oil prices (through the OPSF) is not feasible in a regime of rising crude prices due to lack of government resources”.

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