Solons favor government control on oil prices

The chairman of the House committee on energy on Friday supported a Department of Energy (DOE) recommendation to amend the Oil Deregulation Law, to allow the government to intervene to address sudden and prolonged oil price hikes.

Pampanga Rep. Juan Miguel Macapagal Arroyo said he received a letter from Energy Secretary Alfonso Cusi requesting Congress to amend the Oil Deregulation Law to provide a framework for government intervention, and to require the unbundling of the cost of retail products to determine their true and the pass-on costs.

"I welcome the proposal of the DOE to amend the Oil Deregulation Law after oil prices escalated over the past eight weeks,” Arroyo said in a statement. “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.”

In the Oct. 18 letter, Cusi cited the need to revise the law to allow the government to address the sudden and prolonged oil price spikes.

"The country is currently facing a prolonged oil price spike due to continuing rise in world market price resulting from the sudden global increase in demand and unanticipated lack of supply," he said.

The Organization of Petroleum Exporting Countries (OPEC) agreed to increase the production and supply of crude oil by 400,000 barrels per day (bpd) and will meet on Nov. 4 to reassess the situation.

Cusi said the Philippines uses about 425,000 bpd, representing only 0.4 percent of the world supply.

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.

Cusi earlier said prices of petroleum products are expected to further increase until early next year with the current shortage in oil supply in the world market.

He attributed the oil price hike in the past eight weeks mainly to developments in the global market.

Global supply is still lacking about 3 million bpd as oil producers and exporters are only supplying 100 million bpd while the demand is at 103 million bpd.

Meanwhile, the DOE said it is hoping to tap the Tax Reform for Acceleration and Inclusion (TRAIN) Law to assist the transport sector in the wake of the high oil prices.

"There is a law where we can get assistance and that is Section 82 of the TRAIN Law where the excise tax can be used in times or situations like this one," DOE Assistant Secretary Gerardo Erguiza Jr. said in a virtual briefing.

Section 82 states that five years from the effectivity of the Act, the yearly incremental revenues can be used for fuel vouchers to qualified franchise holders of public utility jeepneys (PUJs) and for fare discount from all public utility vehicles (except trucks for hire and school transport service) in the amount equivalent to 10 percent of the authorized fare.

"We discussed that in Congress and one of the things taken into consideration is that what was being collected is still there," Erguiza said. (See full story online at

He said they have started talks with the Department of Budget and Management regarding the status of the funds.

"It's a total government effort and we are in the process of asking the DBM," he said.  (See full story online at

He said the provision to suspend the implementation of the excise tax under the Bayanihan Law when the trigger mechanism is reached has lapsed.

Oil prices have gone up for the eighth consecutive week amid an ongoing tightness in global oil supply.

The country's oil firms raised the price of gasoline by a total of P7.20 per liter and diesel by P8.65 per liter for the past eight weeks.

Meanwhile, Senator Grace Poe urged Malacañang to consider temporarily suspending the collection of excise tax on gasoline and diesel to ease the burden of rising oil prices on jeepney drivers, delivery riders and those transporting farmers’ harvests to the market.

Senator Imee Marcos said it would be better if the Palace could issue an executive order suspending excise taxes.

Senator Sherwin Gatchalian said he agrees that suspending the excise tax is one way to cushion the abrupt spike in global crude prices. In fact, that was in the TRAIN law but that feature expired last year.

The Department of Finance, however, earlier warned that the suspension of excise tax collection from petroleum products may result in a loss of P131.4 billion in government revenues.

Topics: Department of Energy , Oil Deregulation Law , oil price hikes , Juan Miguel Macapagal Arroyo
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