Palace mulls lifting Executive Order 839

PNOC ready to supply fuel if need arises

Officials said Tuesday that they were considering lifting price controls on oil products after Energy Sec. Angelo Reyes warned that the typhoon-ravaged country could end up running out of fuel within weeks, if not days.

Also on Tuesday, the Philippine National Oil Co. (PNOC) announced that it was ready to supply fuel if the local petroleum companies were unable to do so.

President Gloria Arroyo last month froze fuel pump prices on the main island of Luzon to their pre-October 15 levels to help the country recover from back-to-back deadly storms.

Some companies have since ease up on import volumes as crude prices rise. Several areas of the country have reported long pump station queues and key supplies, such as diesel, running out.

The Cabinet discussed on Tuesday the oil firms’ call to lift oil price freeze order, said President Arroyo’s aides.

Economic Planning Sec. Augusto Santos said that President Arroyo ordered the National Disaster Coordinating Council (NDCC) to determine whether the nation remained under a “state of calamity,” the only condition under which Manila can impose controls on a deregulated industry.

The government said floods, landslides and disease after the recent storms killed at least 1,169 people, with some 97,000 still at evacuation centers.

The World Health Organization (WHO) also reported that 1.1 million people were still living in flooded areas.

Cabinet and Reyes

Sec. Reyes told the Cabinet meeting Tuesday that the country’s oil supply had dwindled to eight to 13 days’ worth, from three months originally, Santos added.

Reyes said the same thing on Monday during a meeting with oil company executives and transport group representatives.

Santos, in a radio interview also on Tuesday, said, “The President wants to know the situation because if we’re in state of calamity the EO 839 will continue. That will be the first step to determine the issue on petroleum prices.”

Meanwhile, Trade Sec. Peter Favila said the government was separately consulting oil company executives to discuss other ways of helping the transport sector recover.

Santos also tried allayed fears about a looming fuel shortage Reyes has warned about.

Santos, also director general of the National Economic Development Authority (NEDA) said, “In the meantime we should not worry about the warning of Secretary Reyes because the government is doing everything to ensure enough supply of fuel.”

PNOC assurance

The oil and gas unit of state-owned Philippine National Oil Co. (PNOC) announced that it was willing to supply the country’s fuel requirements should oil firms’ stocks run out.

Jacinto Paras, chairman of PNOC-Exploration Corp. (PNOC-EC), “If there will be supply of problem of oil as voiced out by oil companies, PNOC-EC is ready to supply oil though its various contacts in Asia and the Middle East region if allowed by the President.”

Paras added that should oil companies run out of supply, government could takeover their operations to uphold public interest.

“We will use their facilities,” he said. “Pwede mag-ship directly to the stations, basta kung papayagan kaya namin [They can still ship directly to the stations, so long we allow them].”

Exploration Corp. is the upstream petroleum and coal unit of PNOC. The corporation is 99.78 percent owned by the government, with the remaining 0.22 percent held by the public in the local stock exchange.

Besides energy exploration and development activities, the corporation supplies oil to Bangladesh and would soon also do so to China.

Paras said that it would not be hard for them to supply their own country first—should the situation warrant it.

Skeptical of Reyes

Lawmakers also on Tuesday raised suspicions over the claims about the looming fuel shortage, which, according to the congressmen, is either a deliberate move to push the government to lift price controls or a telltale sign that oil companies in the country are manipulating prices.

House Speaker Prospero Nograles said that the Department of Energy’s declaration about the looming shortage was a confirmation of the alleged practice of price manipulation by the so-called Big 3 oil firms.

The Speaker added that oil companies increased their pump prices by at least P1.25 a liter last month and were only forced to rollback their prices days after President Arroyo’s issued Executive Order 839 to put a price ceiling on petroleum products.

“The price rollback was reflective of the true prices in the international market since even the oil companies admit that they cannot import oil at a loss,” he said. “That means that they still have stocks bought at price reflective of the price in the international market prior to their botched October increase.”

Nograles added that while Energy department’s claim of oil shortage may be true this time, the attempt of the oil companies to increase their prices in October was a solid indication of price manipulation. He noted that the oil firms tried to increase their prices despite the fact that they have yet to re-stock their inventory.

Meanwhile, Rep. Satur Ocampo of Bayan Muna party-list said that oil companies were deliberately stopping importing petroleum products. “If the oil companies did stop importing supplies, then it is a deliberate, willful and malicious move to increase pressure for the lifting of EO 839.”

“The oil company executives have admitted it,” he added. “They are in the business precisely to gain profits, regardless of the impact of their pricing schemes on consumers and the public. Under no circumstances can these firms be expected to uphold public interest at the expense of their profiteering.”

Federation’s alternatives

Also on Tuesday, the Federation of Philippine Industries (FPI) said that the government should only temporarily implement the price caps on pump and liquefied petroleum gas (LPG) products in Luzon, as well as review Executive Order 839.

In a statement, Jesus Arranza, federation president, said that “the Federation hopes that the oil price freeze be lifted soonest” as the “volatile global market . . . is gravely affecting the local petroleum industry.”

“The federation is emphatically recommending that a constant and thorough review be made, especially considering that petroleum products are traded commodities,” Arranza added.

He said, “Putting a cap on oil prices should only be temporary so as to reasonably address the extraordinary situation, and must also be carefully studied in order to come up with a realistic price.”

“Otherwise, [the price cap] will necessarily create a shortage since there is no law that will require anybody to sell its product at a loss,” he said.

Meneleo Carlos, federation chairman, added, “There is no likelihood [of price manipulation due to possible shortage] in the case of petroleum products, except in areas that are still flooded—where delivery of fuel may be impeded. Therefore, it is best to lift price controls for oil and other commodities [in areas] where the floods have receded.”

AFP, ANGELO S. SAMONTE, EUAN PAULO C. AÑONUEVO, FRANK LLOYD TIONGSON AND BEN ARNOLD O. DE VERA, Manila Times