The Department of Energy (DOE) will not support proposals to repeal the Oil Deregulation Law, largely blamed for the unabated oil price increases in the country, Energy Secretary Angelo Reyes told the House committee on appropriations scrutinizing his department’s P1 billion proposed budget for 2009.
“I would like to have that power, but the consequences are not desirable. I know the implications,” Reyes, former military chief and defense secretary, said.
He acknowledged that the DOE has “no power” over oil companies such as the so-called “Big 3” – Shell, Petron, and Chevron (formerly Caltex) – to control their prices.
“The most we can do is to monitor, although we have the Department of Justice-DOE task force,” he told Cagayan de Oro Rep. Rufus Rodriguez, who asked whether the government can go after oil firms colluding with one another “to cartelize” the prices of petroleum products.
Reyes cited the case of the defunct Oil Price Stabilization Fund (OPSF), which was dissolved in the late 1990s after it incurred liquidity problems.
“Just like the OPSF, it (regulated law) went bankrupt. There was no fund. Under a regulated industry, we have to put up a fund. But the question is, can we sustain it? In Indonesia, India, and other countries, they abandoned the idea,” he said.
“The logic of a regulated market is that if the prices are high, you set the gear, then you should shoulder it. The logic of oil deregulation law is to have more competition. We now have small players. We don’t want only one dominant power to control the market,” he said.
At the same time, he shot down insinuations that the country’s biggest oil companies have been in collusion to set a “cartelized pricing scheme,” saying the competition lies not in the prices, but in their services, which vary.
The DOE chief was likewise non-committal when asked by Parañaque Rep. Roilo Golez whether a price rollback is in the offing, following the significant reduction of the prices of crude oil in the world market.
“Under the regime of deregulation, nobody can. I’m not in a position to say that. The prices are determined by the law on demand and supply. I can’t paint a rosy picture if there is a problem,” he said.
“It’s easy to say that, and people will applaud, poging pogi tayo diyan. But they (oil firms) are the ones making the announcement. That’s the role of a cabinet member, pag good news sila (oil firms) ang nag-a-announce, pag bad news kami,” he added.
A House official earlier revealed that contrary to oil firms’ excuses, even small players in the industry are also making a killing in terms of profits, as shown in their financial statements.
Cebu Rep. Eduardo Gullas cited the financial reports filed by Total Philippines Corp., Seaoil Philippines Inc., the Mindanao-based Phoenix Petroleum Philippines Inc., Unioil Petroleum Philippines Inc. and Filpride Energy Corp. before the Securities and Exchange Commission (SEC).
Profits of these independent players — aside from the popular three Pilipinas Shell, Petron Corp. and Chevron Philippines — have increased “considerably,” compared to their previous profits, long before the series of oil price hikes hit the world and local markets.
In a statement, Gullas, head of the 12-man House contingent to the powerful bicameral body Commission on Appointments, said that Total reported a “net profit of P324.79 million in 2007 — a huge reversal from the P290.14 net loss the firm posted in 2006.”
Seaoil told the SEC that it obtained a “net profit of P123.4 million in 2007” or 235 percent higher than the P36.84 million that the firm posted in 2006.”
Phoenix, whose operations are limited to Mindanao, declared a “net income of P122.36 million in 2007,” up by 65 percent from the P74.26 million it posted in 2006.
Unioil, which realized a net income of P35.79 million in 2007, reported 78 percent increase from the P20.09 million gains it reported in 2006.
Filpride Energy Corp. reported a 259-percent increase in net profit, from P1.44 million in 2006 to P5.17 million in 2007, said Gullas.
Of all the small independent players, the administration lawmaker pointed out that “only Eastern Petroleum Corp. reported a slight net profit decline, from P8.57 million in 2006 to P7.18 million in 2007.”