DOE Proposes Amendments to Oil Deregulation Law to Cushion Price Shocks

MANILA, Philippines — The Department of Energy (DOE) has formally recommended amendments to the Downstream Oil Industry Deregulation Act of 1998, proposing stronger safeguards to protect Filipinos from future global oil shocks, but stopping short of seeking government control over fuel prices. Energy Secretary Sharon Garin said the proposed amendments are primarily aimed at strengthening the country’s energy security by extending available oil supply during emergencies. “Among the three proposals are the establishment of a national fuel reserve equivalent to at least 60 days of supply and the increase in the minimum inventory requirement for oil companies from 15 to 30 days,” Garin said at a virtual briefing yesterday. “These are not simple regulatory amendments. These are practical measures to strengthen our energy security, improve supply resilience and better protect the Filipino people from future global disruptions,” she said. Despite calls for tighter regulation of the downstream oil industry, Garin clarified that the DOE’s proposal does not include changes to how fuel prices are set. “This is quite a very sensitive issue, and the fact that it’s oil deregulation, the concept was to leave it to market competition so that the theory is that prices would fall when there’s competition among oil companies,” the energy chief said. “I think rather than prescribing the price … what we’re trying to propose is that there are safeguards. One of the safeguards there is to have a strategic reserve so that the government can monitor oil trading – in that sense, that we did also,” she added. Garin noted, however, that Congress will ultimately decide what amendments should be included in the revised law, including whether the government should have a greater role in regulating fuel prices or require the disclosure of unbundled oil prices. At the same briefing, Garin announced another round of fuel price hikes this week, with the cost of diesel rising by P1.57 to P3.57 per liter and kerosene by P1.70 to P3.70 per liter. Gasoline prices, meanwhile, are expected to either increase by P0.25 per liter or decrease by P1.75 per liter. “The industry is beginning to stabilize… Hopefully, we’ll eventually reach a point where prices return to their pre-war levels,” said Garin. Dubai crude fell to around $64.51 a barrel as of July 2, while global benchmark Brent crude traded below the $72-per-barrel mark yesterday. Energy Undersecretary Alessandro Sales said the drop has yet to be reflected in domestic pump prices, which are benchmarked against the Mean of Platts Singapore. “For now, MOPS prices for diesel and gasoline remain high, but hopefully they will stabilize within the next one to three months, as 30 percent of delivery volumes pass through the Strait of Hormuz,” Sales said. MOPS diesel was priced at $92.37 per barrel a week before the Middle East war started. Despite easing geopolitical tensions, it still settled at around $114.73 per barrel last Friday. “We hope that the price trajectory continues to move downward in the coming months,” Sales said. — Brix Lelis