Amid continuous fuel price hikes, the Philippine House committee approved the bill known as the Oil Deregulation Law.
Purpose of the Oil Deregulation Law
Also known as the Downstream Oil Industry Deregulation Act, the committee empowered the measure. However, it’s “subject to form and style.” The introduced stipulation aims to regulate the minimum reserve for petroleum products. Its purpose is to monitor supply security and divide petroleum costs.
“Unbundling the retail price of domestic petroleum product does not run counter to the principle of deregulation, and is, in fact, a tool to ensure its effectivity. “Thus, the DOE (Department of Energy) must be mandated and capacitated to monitor the unbundled retail prices,” said Marikina City Rep. Stella Luz Quimbo.
She added that the measure would prevent companies from adjusting their pump prices unlawfully. They based it on the Mean of Platts Singapore’s (MOPS) weekly changes. It could be likewise established on the average daily trading transactions of diesel and gasoline.
The Singapore-based market wire service Standard and Poor’s Platts evaluates and summarizes the said transactions. Besides, it mustn’t be the presumption of price monitoring in the Philippines. Quimbo is also one of the authors of the legislation.
Earlier, the Palace conferred with Congress to review the Oil Deregulation Law. It’s a part of the government’s medium-term feedback to the Russia-Ukraine crisis.
Reduction of Excise Tax on Fuel Products
The Fuel Crisis Ad Hoc Committee highly suggested the endorsement of House Bill 10488 to the House of Representatives. The statute seeks to reduce the excise tax on fuel products.
Unquestionably, it will terminate TRAIN Law excise tax rates if the crude oil price exceeds $80. At the same time, it will return the same when it drops down to $65. The bill that amends the Oil Deregulation Law could quickly handle the country’s issues with increasing petroleum products.
“Our country is facing a serious energy crisis as oil prices have steadily increased for the past ten weeks. The year-to-date price adjustments for gasoline, diesel, kerosene and LPG stand at net increments of P20.25 per liter, P20.55 per liter, P17.58 per liter, and P12.05 per kilogram, respectively,” said the committee.
Government-Owned Strategic Petroleum Reserve
The worldwide market is experiencing wavering oil prices. The Independent Philippine Petroleum Companies Association (IPPCA) considers initiating government-owned strategic petroleum reserves. According to the organization, it is one of the long-term solutions to tackle the unpredictable oil prices.
“It’s strategic to store crude because you don’t need to dispose (of) it immediately, unlike diesel or gasoline,” said IPPCA chair Fernando Martinez.
He said in a Senate Energy Committee hearing that the supply facility should store crude. It’s because crude is safer to store than diesel or gasoline. The industry seeks the government’s help to convert lands in Bataan and Batangas for strategic reserve facilities since both provinces have ports.
Moreover, Martinez outlined a recommendation for the central bank to put Philippine reserves not only in gold or dollars. He’s also suggesting putting reserves in “black gold” or petroleum.
According to IPPCA, oil players are now investing ₱15 billion additional capital. They will import the same output of petroleum products regardless of the skyrocketing world market prices. He added that oil companies would shoulder all the losses when the price drops after doubling their stocks. Rather than holding off the excise tax after three months of a surge in oil prices, he suggested the suspension be after a month.
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