DOE chief told: Stop gas shortage

MANILA, Philippines – President Arroyo has instructed Energy Secretary Angelo Reyes to address the problems facing the oil industry and to avert any fuel shortage in the market.

Reyes told reporters about Mrs. Arroyo’s instructions during a briefing at Malacañang yesterday.

However, Reyes refused to answer questions about the possibility that oil companies might run out of supply as claimed by their representatives.

“I am certain that the government will see this problem through,” he said. “Something is being done. Everything is being done by the government.”

Reyes downplayed the reported shortage in supply of petroleum products across Luzon, where the government has frozen their prices.

“That is speculative,” he said. “We can handle this problem. There is no need to panic.”

However the other day, Reyes reported that the supply of petroleum products is down to less than two weeks.

These reports of supply shortages have prompted some senators to call for a government takeover of the operations of oil companies as allowed under the Oil Deregulation Law.

Executive Secretary Eduardo Ermita did not discount the possibility of a government takeover.

The freeze in prices was a legal measure taken by Mrs. Arroyo in response to the unreasonable increase in the prices of petroleum products, he added.

However, Reyes said a government takeover of the operations of the oil companies would be an extreme measure that would not necessarily be taken.

“The government, under extreme situations, can invoke that principle as an extreme, extreme, extreme option,” he said. “But I don’t see that happening.”

On the other hand, Assistant Solicitor General Marissa Macaraeg-Guillen said yesterday the government can take over oil companies in case of crises.

“Yes, under Section 14-E of the Oil Deregulation law,” she said.

At the hearing of Shell’s petition to stop the price freeze, Judge Winlove Dumayas of Makati Regional Trial Court Branch 59 did not immediately issue a TRO against Executive Order 839.

He gave the government lawyers until Friday to present their witness to prove that EO 839 is constitutional and to refute the claims of Shell that it is incurring losses by the millions due to its implementation.

EO 839 took effect last Oct. 24 and put a cap on prices of petroleum products after President Arroyo placed Luzon in a state of calamity.

Reyes clears oil firms

Reyes cleared yesterday Pilipinas Shell Petroleum Corp., Chevron Philippines Inc. (former Caltex Philippines Inc.) and Petron Corp. of allegations of overpricing when he appeared before Manila Regional Trial Court Branch 26 yesterday.

Reyes told reporters he was speaking as an amicus curiae (friend of the court), to provide information to allow the court to arrive at a proper decision on the case of alleged overpricing by oil firms.

He was invited as an expert witness or a resource person to give his opinion on the case, he added.

In his statement in court, Reyes said the computation of former National Economic and Development Authority director general Ralph Recto showing an overprice of P8 per liter was based on “mangled” data.

“There is something wrong with the computation (of Recto),” he said.

“When you mangle the data which is a fact, you come up with wrong conclusions. You cannot define a fair price in oil. It is not a physical or exact science.”

Recto did not show him a computation of the alleged overprice, he added.

Reyes said based on a letter which Malacañang had forwarded to him, new NEDA Director General Augusto Santos clarified the agency does not have an economic formula or model to determine pump prices.

If Recto’s computation is true, the government should jail the oil company executives, he added.

Reyes submitted to court the letter of Santos, as evidence to prove that there was no overpricing.

However, Reyes refused to answer some questions during the hearing.

He was not a witness but an amicus curiae, he added.

Lawyers said an amicus curiae is not compelled to answer questions but to relate his opinion about a certain issue the court wants clarified.

Reyes was evasive of questions from Vladimir Cabigao and other lawyers of petitioner Social Justice Society.

Reyes shot back at Cabigao during the hearing: “Don’t attack me!”

“If you want me to answer your questions invite me again as a witness,” he said. “We could debate even for a week!”

In response, Cabigao said Reyes did not show any computation to prove that no overpricing had taken place.

Reyes only told the court information that had already been reported on radio and the newspapers, he added.

When Reyes was interrupted several times while he was discussing the history of the oil deregulation law and the oil industry in the Philippines, he got irked.

“Let me finish first what I have to say,” he yelled.

During the hearing, Reyes related what he knew about the oil industry for about an hour.

“Oil issue is not only an economic commodity,” he said.

“It is also a political commodity. The oil deregulation law was passed because oil is a volatile commodity.”

Reyes said Congress had to pass the oil deregulation law because the government could not continue to subsidize the oil industry.

“The job of the government is to balance conflicting interests,” he said.

“Oil companies’ interests is to raise prices and the interest of the public is to lower the prices of oil. We are protecting the total public interest.”

Reyes said all sectors must be protected, not just the public.

“They must co-exist,” he said.

Towards the end, Judge Silvino Pampilo Jr. adjourned the hearing and stopped Cabigao and the other lawyers from further questioning Reyes.

Before the hearing started at 9:30 a.m., Reyes met closed door with Pampilo and nobody was allowed to enter the judge’s chambers.

Reyes arrived in court at around 9 a.m.

The hearing was supposed to start at 8:30 a.m.

Shorter hours for gas stations

In the cities of Lucena and Batangas, gas stations have implemented shorter business hours after the government froze the prices of petroleum products in Luzon.

A gas station owner who requested anonymity said they started allocating their petroleum products to 10 liters per motorist to serve more of their customers.

Some independent stations in Lucena have reportedly stopped operations for three weeks now because of the freeze in oil prices.

In Batangas, dealers are affected not only by the price freeze but by the collapse of a bridge where fuel tankers used to pass.

Juanito Sia, Batangas Shell Dealers Association president, said they have maintained their monthly allocation but the problem is the delivery of products from a refinery in Batangas City.

Some Shell stations in the town of San Jose and in Lipa City have started reducing working hours because of the unavailability of supply since last week.

“Deliveries of petroleum products have been limited because alternate routes in the province do not allow the passage of heavy trucks so fuel transporters are left with no other option but to use smaller trucks,” Castillo said.

The Bridge of Promise in Barangay Kumintang Ibaba and Barangay Gulod Labac collapsed during the onslaught of typhoon “Santi,” disrupting the mobilization of large companies in the area, including the Shell depot.

Another Shell station in Batangas City has reportedly been waiting for their supply of V-Power and Premium gasoline for the last three days.

Public works and highways officials said they estimate it will take them about a year to construct a new bridge.

City officials said 70 percent of the LPG supply nationwide has been affected.

So are the flights of flag carrier Philippine Airlines whose fuel farm tank in Batangas accounts for some 30 percent of jet fuel consumption in the country, they added.

Thirty percent of the delivery of cement from the two plants in Batangas to Metro Manila has been also hampered, and about 70 percent of the plastic resin supply coming from the only operating petrochemical plant in the country.

LPG demand rises

In Bataan, police reported yesterday the number of tankers loading LPG cooking gas from the Liquigaz terminal in Alas-Asin in Mariveles has more than doubled during the last two weeks.

The Liquigaz terminal normally serves 35 – 40 LPG tankers in 24 hours, but the number has risen to 70.

On Tuesday, Liquigaz has loaded 37 tankers during the day, while 55 others were on standby on the roadside of Alas-Asin fronting the sea, reports said.

Each tanker has an average cargo of 1,500 kilos of LPG with each truck loaded within 25 minutes in four loading bays in 24-hour basis, reports added.

Liguigaz has enough stock of LPG.

Reports said a Taiwanese vessel just arrived and was unloading 1,500 metric tons of LPG.

Police said in Balanga City, three dealers of LPG said they have enough supply and have not felt any shortage in merchandise yet.

Gaz Haus, dealer of M-Gas of Caltex and sellers of Shellane of Shell and Gasul of Petron have no problem with their stocks.

NDCC reviews state of calamity

The National Disaster Coordinating Council has started a review of the state of calamity in some areas of Luzon for the possible lifting of the price freeze on oil products.

Lt. Col. Ernesto Torres, NDCC spokesman said the review is underway on recommendation of the Department of Justice, Department of Energy and oil companies.

“In fact, the Price Monitoring Coordinating Council had a conference this morning, presided by Vice President Noli de Castro, to tackle the issue,” he said.

“The NDCC was there to give vital inputs on areas still affected by the calamities.”

Torres said the NDCC will submit appropriate recommendations to the national government to address the growing concerns on the freeze of prices of petroleum products.

“We recognize the seriousness of the situation; these are difficult times and to be able to normalize the situation may require difficult measures to keep our economy afloat and our society in order,” he said.

“It may require a great amount of understanding and sacrifices on the part of the government, the private sector and even the individual citizens.”

Palace urged to retain EO 839

A think tank urged Malacañang yesterday to reject pressure from oil firms recall Executive Order 839 freezing prices of petroleum products.

Freedom from Debt Coalition vice president Etta Rosales said price increases can lead to “cascading effects” throughout the industry and in the economy, especially for the country’s “disaster-battered economy” in a period of global recession.

“Letting oil price to increase together with the global market at this point would result to depressed Personal Consumption Expenditure (PCE), which is the main driver of economic growth, pegged at around 70.36 percent of the Gross Domestic Product (GDP) as of end-2008.

“Depressed PCE will then result to further decline of economic growth, especially since it is PCE, growing at 15 percent from 2007-2008, that saved the economy from the decline of net export last year.”

Rosales, a former lawmaker, said if EO 839 is lifted, the transport sector might pass on added costs to consumers, resulting in higher fares and supply-chain costs.

“A policy of ‘stimulating the economy’, which the government is currently adopting would be inconvenient from a policy of letting the unmitigated rise in oil prices,” she said.

The FDC also urged Congress to repeal Republic Act 8479, the Oil Deregulation Act of 1998.

“(The law is) hampering the government’s ability to complete its political resolve to reduce oil prices and protect Filipino consumers,” she said.

Rosales said the law makes oil companies think that the government cannot regulate them in any way.

“High fuel costs will likely depress corporate income, and with it household income,” she said.

“That would mean reduced revenues for government during an inopportune time of huge fiscal deficits.”

Bayan does not believe shortage

However, the group Bayan said a shortage of petroleum products cannot occur because oil companies usually maintain a 45-day inventory.

Bayan secretary-general Renato Reyes Jr. said even if small oil retailers stopped importing, the huge market size and inventory of the major players could easily fill in the gap.

“In fact, many of the so-called independent firms only get their oil from the bigger companies,” he said.

“(Energy) Secretary (Angelo) Reyes should stop reinforcing the propaganda of big oil players about shortage by making irresponsible statements.”

Reyes said there is enough oil in the country’s oil refineries, depots, and terminals to meet existing demand, not to mention petroleum currently in transit as firms make their purchases months earlier.

“If some pump stations stopped selling or cut service hours as reported, it is not because there is no more oil but because the big companies are manipulating supply, including what they sell to smaller retailers, he said. — –Marvin Sy (The Philippine Star) with Sandy Araneta, Arnell Ozaeta, Katherine Adraneda, Jose Rodel Clapano, Ric Sapnu, James Mananghaya, Dennis Carcamo