BSP sees no reason for oil firms to raise prices

MANILA, Philippines – There is no reason for fuel pump prices to increase with the scrapping of Executive Order 839 that had implemented a price cap on oil products in Luzon, officials pointed out.

An official of the Bangko Sentral ng Pilipinas (BSP) said the movement of oil prices in the world market and peso as against the US dollar does not justify an increase in pump prices.

The Cabinet-level Development Budget Coordination Committee (DBCC) has pegged the projected oil price at $65 to $70 per barrel and the foreign exchange at P47 to $1 this year.

The BSP official pointed out the average price of oil in the world market is still within the projected level while the exchange rate is also within the projected band.

President Arroyo issued EO 839 freezing fuel prices at Oct. 15 levels for an indefinite period of time while a state of calamity or national emergency is prevailing in Luzon that had been battered by tropical storms “Ondoy” and “Pepeng” in a week’s span.

The order invoked the Oil Deregulation Law that allows the Department of Energy to take over or direct the operations of the industry in times of national emergency or when required by public interest.

However, the order drew strong criticisms from various sectors, including business organizations.

Major oil companies led by Petron Corp., Pilipinas Shell and Chevron strongly opposed the imposition of price cap on oil products and warned of possible supply shortage.

BSP Deputy Gov. Diwa Guinigundo also warned that imposing price ceilings on oil products and basic commodities could lead to market distortions.

The public pressure forced Malacañang to revoke the order effective today following the recommendation from the task force of departments Justice and Energy that reviewed the price control order. –Lawrence Agcaoili (The Philippine Star)