Tiaoqui douses cold water on interim oil committee

Energy Secretary Mario V. Tiaoqui said that forming the Interim Oil Committee (IOC) is a duplication of functions and that reapplying the automatic pricing mechanism (APM) for petroleum products would only result in higher prices.

He said that the Department of Energy (DOE) is doing exactly what the proponents of the IOC are recommending.

"We have daily monitoring of crude oil prices, including the local oil company's cost and volume on a monthly basis," he said.

At the same time, the government agency is said to be neutral on the issue of taking sides. However, he admitted that at certain instances the energy department had taken similar positions as the oil companies on certain issues such as the need to pass the Comprehensive Energy Reform Bill and the proposed National Oil Exchange Corp.

The DOE has been releasing on a daily basis the prices of crude oil and refined petroleum products from the Dubai (Asian benchmark) and the Singapore spot market. "They are even published daily in some of the newspaper dailies," Tiaoqui added. The STAR publishes its Oil Price Watch daily. Tiaoqui said that there was nothing in the proposed IOC that it has not been doing. "Some do not feel that we are neutral because we are probably reporting what they do not want to hear."

Meanwhile, the prices of petroleum products will be higher if government reverts back to the APM, instead of the free market practice, according to Tiaoqui.

The energy secretary admitted having received reports that the new players in the oil industry are considering a return to the pricing system which was implemented under a regulated environment.

He admitted that it could benefit the new players in the short term, but argued that in the long term, it would only lead to higher prices of petroleum products to the detriment not only of the new entrants but to the economy in general.

"With the deregulated situation, the President can appeal to the oil companies and they (oil firms) could in fact hold back prices. With the APM, prices are automatically increased (or decreased) on practically a monthly basis," he argued.

Under the APM scheme, the prices of gasoline should be more than a peso higher than its present level, he said.

Oil executives said that the APM allows the oil companies to shift the "blame" of high prices to the government rather than to themselves. "It is government which will be implementing the APM, thus getting the blame for high prices and not us," they said.

They added that a return to the pricing scheme could result in the return of the controversial Oil Price Stabilization Fund (OPSF) which was finally settled last year.