Oil firms face takeover over shortage threat

MANILA, Philippines – Lawmakers warned big oil companies yesterday against “blackmailing” consumers by creating a supply shortage, saying they could face sanctions including government takeover.

Speaker Prospero Nograles said that if the companies do not replenish their oil stocks through importation, they would create a supply crisis “where government can interfere in accordance with the laws on the matter.”

“This kind of threat or mild blackmail won’t fly. In the national interest, the government will take over (oil companies),” Nograles said.

“I strongly advise them not to test this route,” he said.

“It should just be a phone call away and the rollback can take effect immediately. However, the representatives of the Big 3 are raising some concerns before their compliance with the president’s directive. This, to me, is just a dilatory tactic,” he added.

“The last thing we want is another increase in oil prices. Everybody is affected, especially those in the lower income groups,” Nograles added.

“Anyway, when times are good, profits come flowing like water from springs,” he said.

“Blackmailing government about a possible oil supply shortage is certainly not a way for oil companies to help our countrymen during these difficult times,” Quezon Rep. Danilo Suarez, chairman of the House committee on oversight, said.

Nograles stressed that under the Constitution, the government is empowered to temporarily take over vital public utilities and companies, including oil firms, in times of calamity or emergency.

President Arroyo has issued Executive Order 839 ordering oil firms to fix pump prices at Oct. 15 levels to ease the burden of consumers still reeling from the ravages of tropical storm “Ondoy” and typhoon “Pepeng.”

Small oil industry players led by Unioil immediately announced price cuts of as much as P2 per liter. Flying V immediately followed suit.

Chevron (formerly Caltex), one of the three big oil firms, grudgingly made a similar announcement, although it said it was exploring some legal options.

The oil firms claimed Mrs. Arroyo’s order would stymie supply as they would be forced to hold off oil purchases.

Suarez and Antique Rep. Exequiel Javier, also an administration stalwart, said now is the best time for oil companies to show generosity and corporate social responsibility.

“All this warning about an oil supply shortage will not help at all in normalizing our situation. Oil companies should show more cooperation and concern by following the President’s directive,” Suarez said.

“The worst that can happen is an artificial shortage in light of these warnings from oil companies. Government will not allow this to happen,” Javier said.

Javier said the good news is that oil prices have slipped to near $80 a barrel Monday in Asia.

“The President’s directive will only be for a temporary duration while the state of calamity has not been fully lifted,” Javier added.

Nationwide scope

For his part, Rep. Florencio “Bem” Noel of the party-list group An Waray said the president’s order should also cover the Visayas and Mindanao.

“Many areas in the south have also been hit by the recent typhoons, and people there, like those in Luzon, need help,” he said.

Former economic planning secretary Ralph Recto said Unioil’s prompt compliance with the EO should prove that rolling back prices wouldn’t do much harm, especially to big oil players.

“Unioil is doing it not out of patriotism, because as a company organized to make profit, it cannot sell its products at a loss. It is able to cut prices because it believes that, after running some numbers, profit can still be had even at reduced prices,” Recto said in a text message.

Rep. Satur Ocampo of the party-list group Bayan Muna said Petron should lead compliance with EO 839 because unlike Chevron and Shell, Petron is partly owned by the government and is controlled largely by Filipino investors.

San Miguel Corp. and foreign and local investors represented by Marcos-era trade minister Roberto Ongpin now control Petron, the largest oil refiner in the country.

Palace confident

Malacañang said it is confident the oil companies will exercise corporate social responsibility and not resort to cutting supply.

“I believe they will not do that. They have corporate social responsibility. They have been doing business for all these years. I don’t believe they will stop doing business now,” Press Secretary Cerge Remonde said.

Remonde said the reaction of the oil companies to Mrs. Arroyo’s EO was expected but they had no choice but to comply.

“I guess they were the ones who were surprised by the political will of the President in exercising the power vested in her, considering we are in a state of calamity,” Remonde said.

“The President is determined to enforce this order for the good of the people,” he added.

Energy Secretary Angelo Reyes reported to the President that the oil companies have committed to comply with the order.

“I told them that compliance is mandatory and they are complying. Prices have lowered,” Reyes said.

It was revealed during the Cabinet meeting yesterday in San Fernando City in Pampanga that Dubai crude has gone up to $75.83 per barrel due to the weakening of the US dollar and the increase in the global demand for oil.

Acting Socioeconomic Planning Secretary Augusto Santos noted that oil prices are “generally on an uptrend” citing an International Monetary Fund report predicting more volatile fuel prices in 2010.

Deputy presidential spokesman on economic affairs Gary Olivar assured the business community that the presidential order is temporary and intended to protect the interest of the public.

“The EO is fully consistent with the presidential powers under the Oil Deregulation Act. Nothing about it, however, can be construed as a retreat by government from its long-standing commitments to market liberalization, policy stability and a favorable climate for foreign investments,” Olivar said.

Boycott

The militant Bagong Alayansang Makabayan or Bayan has called for a boycott of oil companies that continue to defy Mrs. Arroyo’s EO.

“The boycott should be a sign of protest against oil profiteering. We find it hard to believe the threats by oil companies that there will be an oil shortage because they are allegedly losing revenues,” Bayan Secretary General Renato Reyes said.

“Oil products over the past months have remained more expensive than they should be. The previous rollbacks prior to Oct. 15 were not enough. So we really doubt the claim that the oil firms are bleeding from profit losses,” he said.

He said Reyes was also to blame for the oil firm’s alleged intransigence.

“It was the DOE who, after a dialogue with the oil firms, said that the previous price increases are in order thus giving the oil companies reason to insist on their current prices,” he added.

Militant transport group Pinagkaisang Samahan ng mga Tsuper at Operators Nationwide or Piston, for its part, urged Malacañang to get tough on uncooperative oil firms.

“Our call to Malacañang is that it immediately take over Petron once the Big 3 creates an artificial fuel shortage or fuel hoarding that leads to an importation of fuel abroad so that there is enough fuel for transportation and consumers,” George San Mateo, Piston secretary general, said.

Efren de Luna, president of the Alliance of Concerned Transport Organizations (ACTO), meanwhile, said his group would stage mass protests outside the offices of the oil firms if fuel prices are not rolled back.

“If the small players can roll back their prices, why can’t these greedy Big 3 do the same?” De Luna asked.

“The oil companies must look at the current situation of the people and think of ways to help them instead of adding to their burdens,” Caloocan Bishop Deogracias Iñiguez said.

Contempt

Meanwhile, a Manila Regional Trial Court judge ordered Reyes to explain why he should not be cited for indirect contempt for snubbing a court summons.

“Stubbornly, Secretary Reyes did not appear in court (yesterday). He received a subpoena from this court last Oct. 22, received by his chief of staff Ruben Quidilla. I will give them five days from receipt of the notice to answer,” Judge Silvino Pampilo Jr. said.

Panfilo said indirect contempt is punishable by P30,000 fine or imprisonment for six months or both.

The court is hearing a petition, filed by the Social Justice Society, for the issuance of temporary restraining order to stop the oil firms from raising prices.

“I think Sec. Reyes is scared to testify. My message to Sec. Reyes is for him to resign. He has done nothing here. Malacañang has already issued an order to stop the increase, which means the government has the power to stop the oil price increase, contrary to what Sec. Reyes said earlier that they cannot do anything about it,” SJS lawyer Vladimir Cabigao said. –-Jess Diaz and Delon Porcalla (The Philippine Star) with Christina Mendez, Sandy Araneta, Donnabelle Gatdula, Helen Flores, Rainier Allan Ronda, Marvin Sy