Reyes: Oil price control requires huge subsidies

With major oil firms again slashing the prices of their fuel products by token 25 centavos per liter, Energy Secretary Angelo Reyes yesterday tossed to Congress the issue of whether or not to have a fuel subsidy program that would enable the government to regulate the local petroleum market.

“That is a legislative issue. So if we want a regulated market where the government subsidizes (fuel consumption) or a market where we don’t need to subsidize, I am in favor of Congress tackling the issue of regulation,” Reyes told a weekly Kapihan sa Maynila forum.

But Reyes was quick to say that he also wanted the market to be regulated to put a cap on oil prices, adding that such move would require Congress’ approval.

Early yesterday morning, a minute past the midnight hour, Pilipinas Shell Petroleum Corp. and Seaoil Philippines implemented a 25-centavos-per-liter reduction in their gasoline products and 50 centavos per liter for both diesel and kerosene. Petron Corp., Chevron Philippines, Total Philippines Inc. and Flying V immediately followed suit six hours later.

The price cuts mirrored the path of tokenism that oil firms, particularly the “Big Three’s” Shell, Petron and Chevron companies, had taken in recent months. Last week, small oil player Unioil Philippines Petroleum Inc. slashed its fuel prices by P4.75 a liter, a move that did not sit well with the Big Three.

At the Manila Hotel news forum, Reyes pointed out that going back to the regulated market would mean government subsidizing the prices or reviving the Oil Price Stabilization Fund (OPSF) to control market prices. The OPSF, carried out during the Marcos regime and during the early part of the Aquino administration, caused the yearly budgetary deficits to widen.

“We must be aware on what deregulation is. Right now, people are asking DoE (Department of Energy), why are you not doing anything about prices. I tried to explain to them that we are in a deregulated market but only a few understand what deregulation is all about,” Reyes said.

He noted that if the government were to again regulate the market, it would require huge amount of funding under the OPSF. “The people who ask for a regulated market, they don’t know the implication of regulated market. We need to subsidize. And where can we get the money to subsidize? The government. And where will the government get the money? From the taxes,” he lamented.

Reyes met the executives of oil companies last Friday, asking them to explain why they failed to match the price cuts of P4.75 per liter for gasoline and P3.50 per liter for diesel that Unioil implemented earlier.

It was learned that during that meeting held at the DoE compound, some oil executives criticized Unioil for misleading the public.

Roberto Kanapi, Shell’s vice president for communications, said that of the 16 Unioil gas stations, only one station implemented Unioil’s announced price rollback.

“Unioil did not roll back (its fuel prices) as announced and in 16 sites only 1 site rollback (prices of petroleum products),” Kanapi said during the stakeholders meeting Friday.

Eric Recto, president of Petron shared Kanapi’s sentiment saying “the numbers that have been announced (by Unioil) do not reflect the reality.” –PNA