MANILA, Philippines – Malacañang rejected yesterday calls from various business groups for the lifting of the Luzon-wide price freeze on petroleum products.
Deputy presidential spokesperson Lorelei Fajardo said the price freeze would remain in effect for the duration of the state of calamity in Luzon based on the recommendation of Justice Secretary Agnes Devanadera.
“For as long as there is a state of calamity in Luzon, then the price control of oil will remain,” Fajardo said.
She noted that the joint Department of Justice and Department of Energy task force met with the various business organizations, including the Joint Foreign Chambers last Friday, to discuss ways to smoothen the implementation of the price freeze on oil prices.
The Joint Foreign Chambers and local business groups such as the Philippine Chamber of Commerce and Industry, Makati Business Club and the Federation of Philippine Industries have expressed concern over the continued imposition of the presidential directive contained in Executive Order 839.
They claimed that the prolonged price freeze could have an adverse impact on oil supply, and that it could create a black market and eventually diminish investor confidence in the country.
Fajardo said that the joint task force headed by Devanadera and Energy Secretary Angelo Reyes would continue its consultations with the business groups and other stakeholders in the oil industry while the price freeze is in effect.
Review option
But Fajardo said a review of the price ceiling is possible, taking into consideration the movements in global crude prices.
She said the uptrend in international crude cost “may also warrant the review of the price ceiling considering that we know that oil is imported and that they also depend on the prices of the global market.”
“So the DOE can keep track and monitor the prices of oil and can also make the necessary recommendations,” she said.
Deputy presidential spokesperson for economic affairs Gary Olivar, for his part, said the President may lift the price freeze even if the state of calamity is still in place.
“The President has the discretion to lift any kind of price freeze or price control in full or in part, in any part of the country at any time,” Olivar said.
“The EO is justified by the state of calamity and may be lifted on a time schedule independent of the state of calamity,” he added.
Olivar reminded critics of the EO that the President has to make decisions based on the interest of the majority.
“I believe the foreign chambers understand that the President has to be the President of all people, not just of the foreign chambers or the oil companies who were expected to be good corporate citizens, but also of the small people, especially those who have been affected by the recent floods,” Olivar said.
“They are the reasons why she imposed this short-term and specific freeze on oil products for the duration of state of calamity and only in the state of Luzon which at the same time, is always subject to review, not just by the President, as provided by the law, but in this case also by a task force constituted by both the DOJ and DOE,” he added.
Open books
Speaker Prospero Nograles said he is in favor of lifting the oil price freeze provided that oil companies open their books of accounts to determine how much profits they are making.
“The only way we can have the most accurate conclusion is for these companies to open their books and show the public that all the negative things attributed to them are just misperceptions,” he said.
He said that while he recognizes the need to balance public welfare and healthy business environment, the state “must protect its citizens from abusive business practices, including cartelization and manipulation in the oil industry.”
“I understand that business is for profit, but raking in unreasonable profits at the expense of public interest and when the public is left with little or no choice is absolutely unconscionable,” he stressed.
Nograles said the business groups’ position against the EO may be valid “but oil companies must prove through full disclosure of their books that all their price adjustments have been reasonable and have not been bleeding the public through price manipulation or cartelization.”
He said Petron, Shell and Chevron must tell the public why small oil firms like Unioil can sell oil products at lower prices.
“There is a discrepancy in pricing if we compare the Big 3 with small players. How come the small players, which also import oil just like the Big 3, can afford to sell their products at cheaper prices? All these things should be adequately explained,” he said.
Several congressmen, including Satur Ocampo of Bayan Muna, Florencio Noel of An Waray and Mujiv Hataman of Anak Mindanao, have moved to expand the coverage of the EO to Visayas and Mindanao.
Noel, who comes from Tacloban City, said his constituents in the Visayas, like people in Luzon, are suffering from the devastation caused by recent typhoons.
“These weather disturbances hit our region first before they normally proceed to Luzon,” he said.
Hataman said many areas in Mindanao, particularly in Central Mindanao, are still flooded.
Palace told to be firm
Senate Minority Leader Aquilino Pimentel Jr. and Sen. Francis Escudero said the Palace should not let its guard down on the issue.
“Sana panindigan ng gobyerno kung ano ang tama (I hope the government will stand up for what is right),” Pimentel said.
He added that the oil firms should not be allowed to take advantage of consumers in times of calamities and disasters.
For his part, Escudero said that with the current global economic crisis, governments have taken on a more activist, regulatory role.
He also voiced support for calls for a review of the oil deregulation law.
“We can do no less. I call on my colleagues in Congress to speedily act on proposals that aim to review the oil deregulation law,” Escudero said.
“Our country’s poor and dwindling middle class bear the burden most and they constitute a far greater portion of the population. Why can’t these oil companies wait until our people have recovered from these disasters? This is, after all, a remedial and temporary action by government,” Escudero said in a statement.
“The oil price freeze is the least that government can do for the people to alleviate their suffering,” he said.
Escudero pointed out that crude oil only cost $10 per barrel in January 1999. Before the credit crisis struck the US last year, there had been projections that fuel prices could even shoot past the $100 level because of increased demand amid the dwindling supply of oil worldwide.
While the country has reduced its dependence on imported oil from 92 percent in 1973 to less than half today, he said that the poor are still severely affected by any increase in fuel prices.
Escudero said Congress should plug the loopholes in the oil deregulation law or repeal the measure altogether for the sake of ordinary consumers.
He pointed out that when Congress passed the law in 1998, the expectation was oil prices would decline because of greater competition among the oil companies.
“The law has become an artifact. We have to act quickly before the forecasts of oil prices soaring, once again, above the $100 level become a reality when the global economy recovers from today’s crisis,” he said.
Pimentel said it was massive pressure from oil companies that led to the passage of the oil deregulation law.
He said the repeal of the oil deregulation law today would depend on the “attitude of Congress.”
“I cannot speak for Congress because I do not know where they stand,” the Senate minority leader said.
Meanwhile, the militant Pinagkaisang Samahan ng mga Tsuper at Operators Nationwide or Piston hailed Malacañang’s move to conduct an inventory of the oil companies’ stocks but said the Oil Deregulation Law should be repealed for good measure.
“It is a positive move but it is not enough,” George San Mateo, Piston secretary-general, said.
The group also reiterated its call for Malacañang to sack DOE’s Reyes for not doing enough to rein in fuel prices. –-Marvin Sy (The Philippine Star) with Jess Diaz, Christina Mendez, Rainier Allan Ronda
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