ASEAN KEY DESTINATIONS
Philippines revives strategic oil reserves plan
The Department of Energy (DOE) is reviving a plan to raise strategic reserves, as the agency prepares for a review of the country's oil deregulation law to address consumers' concerns over the rising prices of fossil fuel products.
Energy Secretary Jose Rene Almendras said the DOE would like to study how the government can improve on the reportorial requirements and other information being submitted by oil companies, among other issues.
"I for one, the Secretary of Energy, would like to know how much oil/fuel go in the country. I don't even know how many liters of diesel go into the country. We are completely dependent on what we are told by the companies," he said.
Almendras said imports declarations by the oil companies are key to determining their inventory levels.
"We will have a better position given that data to determine pricing," he said.
Despite the proposed review of the deregulation law, "going back to the regulated industry is not an option for us right now" as this could send a negative message to the petroleum sector, the DOE chief however said.
Instead, the department is open to putting up a stockpile of oil products as strategic reserves to influence market prices.
"We are sending a group to an oil ministers meeting around February in Riyadh, Saudi Arabia because there is a proposal that we want to submit to the Minister of Oil of Saudi Arabia regarding strategic reserves," Almendras said.
Prior to the passage of the Downstream Oil Deregulation Act of 1998, which opened up the market to competition, the industry was controlled by Petron Corp., Pilipinas Shell Petroleum Corp. and Chevron (formerly Caltex) Philippines Inc.-the so-called Big Three.
Prices then were tempered through a government-imposed Oil Price Stabilization Fund (OPSF) from which the companies could draw from instead of raising prices. As its liabilities under the OPSF ballooned, the government however abolished the subsidy through the passage of the oil deregulation law.
Despite more than a decade in place, the law has yet to break the dominance of the Big Three, which still control bulk of the market. The new entrants, so-called independent oil players, account for only a quarter of the market.
Worse, price adjustments implemented by all players, whether big or small, have been uniform, drawing the ire of consumers.
In less than two months, oil companies have raised their prices five times.
At present, oil companies are required to inform the DOE of any impending adjustment in their prices hours before implementation without disclosing their inventory levels.
Letters that do not contain full contact information cannot be published.
Letters become the property of AseanAffairs and may be republished in any format.
They typically run 150 words or less and may be edited
submit your comment in the box below