Press Release
April 25, 2009

To address collusion, profiteering and overpricing in oil industry:
Pia backs review, revision of oil deregulation law

Senate opposition member Pia S. Cayetano has joined the growing clamor in the Senate for a full-blown review of the Oil Deregulation Law (Republic Act 8180) to make way for amendments and possibly even the repeal of the 13-year-old law in light of recent developments indicating undue profiteering and overpricing by oil companies.

Cayetano expressed full support to calls made recently by Senate President Juan Ponce Enrile and Minority Leader Aquilino Pimentel Jr. to subject the books of oil companies to a public audit, and for the Senate to conduct a comprehensive review of RA 8180.

The issue of oil prices is a gut issue for our people where Congress should play a primary role. Thirteen years is more than enough time to evaluate whether the oil deregulation law has worked for, or against, the public interest. Clearly, it has not.

What has been most pronounced in the last thirteen years, she observed, is the inability of concerned government agencies to clamp down on reports of profiteering, collusion and overpricing by the oil firms.

The lady senator cited revelation made earlier this week by National Economic Development Authority Director-General Ralph Recto, based on a simulation run by NEDA, that unleaded gasoline should only cost about P32 per liter even if gas stations are selling the same for P38 to P40.

The NEDA simulation should be made available to the senators to guide them in studying recent pump price movements, identifying possible instances of price collusion, and coming up with a mechanism to strictly monitor, and possibly control, oil prices in a semi-deregulated environment, she expounded.

She recalled that the government put up Petron through the Philippine National Oil Company (PNOC) in the 1970s with the objective of directly participating in the oil industry to spur competitive pricing. The government chose to give up direct control of Petron, however, under oil deregulation. But since it still holds a 40% stake in Petron, Cayetano maintained that the government could still be an active player in the downstream oil industry.

Armed with its 40% share in Petron, why cant the Arroyo government make its presence felt in the industry, especially in these times when doubts have been raised on the integrity of oil pricing under full deregulation?

When oil prices rise, the government actually takes a huge windfall from the 12% E-VAT it imposes on various petroleum products, including those being consumed by the poor like kerosene and LPG.

This makes it more incumbent on the government to take a more pro-active role, or else it would appear that its profiteering, along with the oil companies amid the peoples hardships, she concluded.

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