By ARNOLD PADILLA
Ending oil deregulation is a must
Deregulation fully exposed the country to the price impacts of speculative activities by oil producers, traders, investment firms, and other financial institutions that exploit the uncertainties in the world market. As mentioned, oil companies can automatically implement price adjustments based on international price fluctuations under a deregulated regime.
The continued domination of monopoly corporations in the oil industry, which can dictate how much local pump prices would move, further exacerbated such vulnerability. Only four companies (Petron, Shell, Phoenix, and Chevron) control 47.2% of the domestic oil market, and just one (Petron) retain 100 percent of the country’s crude oil refining capacity. These companies are tied to the transnational corporations in oil and finance through investments, long-term supply contracts, and other strategic partnerships.
With deregulation, the government abandoned its mandate to guarantee oil supply security and protect the economy and people from excessive petroleum prices. Policy tools to regulate prices and safeguard supply are always necessary but are even more crucial today as the country tries to get back on its feet from the impacts of the pandemic.
Reminding oil companies to ensure the country’s oil supply which is the only “intervention” that the DOE has done amid surging prices, is extremely not enough. The government itself must play the leading role in stockpiling fuel supply through, for instance, a system of centralized procurement of imported oil. Under this system, oil companies will have to buy from the state-owned Philippine National Oil Co. (PNOC). Oil firms thus will have to sell it at a price based on PNOC’s cost of importation, which is cheaper than commercial deals as the government can explore various ways to get discounted prices or even waive taxes. In addition, the government can quickly determine if the oil firms are profiteering or selling at a price that is outrageously higher than the cost of buying from the PNOC.
There are numerous policy options and possibilities, but it must start at ending the oil deregulation regime. (Bulatlat/PN)
