MANILA, Philippines – Oil industry sources disclosed yesterday that some oil companies are forced to close several service stations due to losses in revenues caused by the implementation of Executive Order 839 that mandated a freeze of pump prices in Luzon following the devastation of recent typhoons.
Sources said several stations in Metro Manila have decided to close because of the dealers’ inability to absorb the losses brought about by EO 839, which directed oil firms to revert their pump prices back to Oct. 15 levels in areas placed under a state of calamity after the devastation caused by tropical storm “Ondoy” and typhoon “Pepeng.”
“Stations running out of supply due to EO 839. Jetti in Binangonan, Rizal; Orange station and Shell along Imelda Avenue, Cainta are now closed due to lack of fuel supply,” the source said.
Sources said several stations in eastern and southern Luzon decided to either undergo rationing or close their stations early to manage demand and supply.
“Some retailers in the provinces in eastern and southern Luzon have decided to shut down their third shift from around 10 p.m. and beyond. As a result, there are some layoffs or forced leave of small employees,” the source said.
Sources said that some independent players have already cut their service hours by four to five hours daily.
Another industry source said that there should be a new price increase of 25 to 50 centavos per liter this week, but the EO prohibits the oil companies from adjusting prices.
“Based on MOPS (Mean of Platts Singapore) and foreign exchange, prices should have gone up by P0.50 per liter on gasoline and P0.25 per liter for diesel,” the source said.
Petron Corp. had reportedly cancelled some contracts for diesel importation.
Publicly-listed Petron, the country’s largest oil refiner, also informed the Philippine Stock Exchange that it would incur substantial losses which would reach more than P1.5 billion if the EO will continue.
As a refiner, Petron has 30 to 40 days inventory while oil importers normally have 15 days or two-week inventory.
As of Nov. 3, Dubai crude averaged $76 per barrel from $73 per barrel a month ago while unleaded gasoline imported from the region went up to $80 per barrel from $78 per barrel.
Diesel average in MOPS, benchmark of oil importers, likewise went up by $4 per barrel to $84 from $80 per barrel last month.
Pump prices of unleaded gasoline are being sold at a range of P35.10 to P38.07 per liter and diesel at P26.60 to P31 per liter.
Cooking gas or liquefied petroleum gas should have also gone up by P4 per kilogram as the contract price of LPG went p to $589 per metric ton from $586 per MT last month.
LPG is presently sold at a range of P543 to P612 per 11-kg tank.
Some business groups are already wary about the impact of the EO on the overall supply of petroleum products in the country.
Malacañang orders probe
Malacañang said that there is no reason to be alarmed over the reported closures of some gasoline stations because of the price freeze.
Executive Secretary Eduardo Ermita said that the Department of Energy is already looking into the reported closures as well as the supply shortages in some of the gasoline stations.
“I’m sure that is already being done by the DOE, because we don’t want a situation where there is a shortage of supply to the detriment of consumers,” Ermita said.
“They are looking at the gasoline stations and looking at the situation. So you can be sure this is being looked into very closely by the DOE,” he added.
Executive Order 839 directed the oil industry players to keep their prices at Oct. 15 levels for the duration of the state of calamity over Luzon.
The order has drawn sharp criticism from the oil firms as well as the various business groups because of the indefinite period in which the price freeze would be in place.
In the case of the oil firms, the concern was primarily due to the constant movement of prices in the world oil market.
Ermita said that there is no reason for the consumers to be alarmed because there is an adequate supply of oil in the country in spite of the reported closures of some gasoline stations.
“Our message is do not be alarmed, do not panic. The situation is not that bad. If ever there are one, two or three gasoline stations that ran out of supply, for all we know they have already replenished this in a matter of hours,” Ermita said.
Transport group seeks amendments to EO 839
Party-list Rep. Vigor Mendoza of I Utak Transport Coalition urged amendments to EO 839 to prevent any form of gas rationing.
He said the amendment should include the provision: “Pursuant to Section 14(e) of RA No. 8479, and for the duration of the state of emergency in the entire Luzon, oil industry players are hereby directed to retain the level of the retail price of petroleum products (including those sold in volume to cooperatives/ companies operating public utility vehicles) prevailing on Oct. 15, 2009,” which was one (1) week after the last landfall of typhoon Pepeng.
The EO should also cover the Visayas and Mindanao to prevent oil firms from recovering the decline in revenues in Luzon from consumers in the Visayas and Mindanao.
“This amendment will not only cure the price distortion, but it will, more importantly, help us maintain transport fare to what it is today, not only in Luzon but in the whole country,” he added.
Sen. Joker Arroyo slammed the oil companies for insisting that Malacañang withdraw EO 839.
“It is the height of callousness for foreign oil companies and their lackeys to continuously criticize without letup EO 839 which temporarily regulates the prices of oil products,” Arroyo said in a statement.
Senator Arroyo cited a provision in the Constitution in clear language that covers the President’s issuance of the EO.
“In times of national emergency, when the public interest so requires, the State may during the emergency and under reasonable terms prescribe by it, temporarily take over or direct the operation of any privately owned public utility or business affected by public interest,” Arroyo said, citing Article XII Section 17 of the Constitution.
Sen. Arroyo explained that the EO is well in place after the two devastating calamities, referring to tropical storm Ondoy and typhoon Pepeng, which visited parts of the Philippines creating a national emergency of unthinkable proportions.
“The cost of oil has a devilish chain reaction on almost all products for transport. The government did not take over the oil business as the Constitution permits. After all, they cannot run business. It simply ordered the reduction of oil prices for the duration of the emergency. At some point, the reduced price would be lifted,” he stressed.
Meanwhile, acting Public Works Secretary Victor Domingo ordered repair teams to immediately restore the Bridge of Promise in Batangas that was partially damaged last Saturday by typhoon “Santi” to avert a possible delay to the delivery of petroleum products from the Batangas oil depot to Metro Manila dealers.
Domingo said that the repair on the 105-linear meter Bridge of Promise in Batangas would take three months to complete. –-Donnabelle Gatdula (The Philippine Star) with Christina Mendez, Perseus Echeminada
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