‘Big 3 oil firms a cartel’

The three big oil companies are operating like a cartel and not really competing against each other, Sen. Manuel Villar Jr. said yesterday.

In an interview, Villar said if Petron, Caltex and Shell are engaged in competition, they would not have exactly the same price adjustments for their products.

"They have the same price adjustments. If one increases its prices by an average of 50 centavos per liter, the others also increase their prices by the same amount. It’s as if their officials talk to each other and agree on prices. These companies operate like a cartel," he said.

He added that the cut-throat competition among oil firms envisioned by Congress when it enacted the Oil Deregulation Law, and which should translate to lower prices to consumers, has not happened at all.

Villar proposed that lawmakers amend the deregulation law to install strict safeguards against collective price fixing and other practices that impede free trade and competition.

"We should have our version of the anti-trust law of the Americans. In the United States, if traders talk about price fixing, they get jailed. That is what we should do with our businessmen here who resort to the same practice," he said.

He said even in sectors other than the oil industry, traders resort to uniform pricing.

"If we cannot prevent the oil companies from fixing uniform price adjustments, we might as well scuttle the Oil Deregulation Law and go back to a regulated arrangement, under which it is the government that determines prices," he said.

Oil firms effected their latest price increase more than a week ago. The adjustment was an average of 50 centavos per liter. Caltex and Shell adjusted their prices ahead of Petron, which followed a few days later.

Because Petron has been making the same adjustment as Caltex and Shell, there have been proposals from various sectors and politicians, including Senate President Franklin Drilon, for the government to increase its stake in the largest oil refining company in the country.

Petron is still 40 percent owned by the government. Oil giant Saudi Aramco has a 40 percent stake in the company, with the remaining 20 percent in the hands of small investors, mostly Filipinos.

In a related development, Villar said he cannot accept the assurance of administration officials that they would see to it that whatever tax that may be imposed on gasoline and other petroleum products would not be passed on to consumers.

"I think that it is the consumers who will eventually absorb such tax. Even the proposed tax on text messaging or on cellular phone companies will be borne by the public," he said. — Jess Diaz