DOE chief nixes oil exchange

Energy Secretary Jose Isidro "Lito" Camacho sees no need for a so-called national oil exchange, saying this will run counter to the oil deregulation law’s objective of allowing market forces to prevail in the country’s oil industry.

"The (oil deregulation) law already provides, I think, the ample protection to promote an open market system in the oil industry. I think, it is better to leave it to market forces. Perhaps the concept of an oil exchange might bring us to an era of unified purchasing," Camacho said.

While admitting that he was not able to thoroughly study the proposal, Camacho said he is of the impression that it will centralize procurement of all oil products into one party, a situation that could be dangerous.

"The concept of the national oil exchange must be bringing us back to a non-open market system," he said.

He said the present set-up clearly allows more players to participate in the market.

"Today, we are able to diversify, at least, because it is being done by all the private sector players in the market making their own demand supply computations and making their own decisions so in a way it diversifies the energy requirement into one unit," he said.

Camacho echoed President Macapagal-Arroyo who announced earlier that she would not consider the formation of an oil exchange.

The Chief Executive earlier said she would bat for measures that would make for greater transparency in fuel pricing.

Major oil companies are also opposed to the creation of the proposed oil exchange. Petron Corp. chairman Jose Syjuco Jr. said such exchange is a bane not only to the oil industry but to the entire country.

Former Energy Secretary Mario Tiaoqui had rejected House Bill (HB) 8710, authored by Rep. Enrique Garcia, which proposes to establish a national oil exchange (NOEC), branding it as expensive, inadequate in keeping petroleum prices low, and counter to the deregulation law.

According to the DOE, the creation of NOEC will cost the government about P17 billion and it runs counter to government’s policy of deregulation, liberalization and privatization.