PAMPANGA Second District Representative Juan Miguel “Mikey” Macapagal-Arroyo has welcomed the recommendation of the Department of Energy (DOE) to amend Republic Act No. 8479, or the Oil Deregulation Law, following eight weeks of oil price hikes that contributed to rising consumer prices.
Arroyo, chairman of the House Committee on Energy, is responding to the October 18 letter sent by Energy Secretary Alfonso G. Cusi, requesting Congress to amend the Oil Deregulation Law "to provide a framework for the government to intervene and address sudden, prolonged oil price hikes and require the unbundling the cost of retail products to determine their true and the passed-on cost."
"I welcome the proposal of the DOE to amend the Oil Deregulation Law after oil prices escalated over the past eight weeks. As chairman of the House Committee on Energy, I have long pushed for a special mechanism to prevent overpricing in emergency situations. The Oil Deregulation Law does not give oil companies blanket authority to take advantage of consumers," said Arroyo.
Cusi's letter was also sent to Senator Sherwin Gatchalian, chairman of the Senate Committee on Energy, as well as other Cabinet officials including Executive Secretary Salvador C. Medialdea, Transportation Secretary Arthur P. Tugade, Finance Secretary Carlos G. Dominguez and Trade Secretary Ramon M. Lopez.
In the letter, Cusi cited the need to revise the law to allow the government to address the sudden or prolonged oil price spikes.
Pump prices of petroleum products increased by more than P7 per liter in the past two months, with premium gasoline now nearing the record high of P70 per liter. This happened even as economic activities have yet to return to pre-pandemic levels.
"The country is currently facing a prolonged oil price spike due to continuing rise in world market price resulting from sudden global increase in demand and unanticipated lack of supply," said Cusi.
Cusi said global demand was estimated at 103.22 million barrels a day as of October 16, higher than the global supply of 100.32 million barrels a day.
He said this was due to a surge in economic activities, stocking of inventory of petroleum products, slowed production due to current global direction to source energy from low-carbon emitting sources, international sanctions on oil-producing countries like Iran and Venezuela and Hurrican Ida which disrupted the supply of 30 million barrels to the US.
Cusi noted that before the pandemic, worldwide supply was about 104 million barrels a day. The Organization of Petroleum Exporting Countries (Opec) agreed to increase production and supply of crude oil by 400,000 barrels a day and will meet on November 4, 2021 to reassess the situation.
Cusi said the Philippines utilizes about 425,000 barrels a day, representing only 0.4 percent of the world supply.
He said to ease the situation, the DOE filed a position paper in Congress to amend the Oil Deregulation Law to allow the unbundling of oil products. He said while today's global price per barrel was almost similar to 2018, the current local cost per liter of gasoline is about P9 to P12 higher. He attributed this to the "industry take."
Arroyo said it is time to reexamine the books of oil companies to see if they are taking advantage of the crisis to rake in profits.