DOE bucks price ceiling on petroleum products

MANILA, Philippines - Department of Energy (DOE) Secretary Angelo Reyes warned yesterday against setting price ceilings on petroleum products, saying such a move would be more disadvantegous to consumers.

 “The problem is when you impose a price ceiling, the cure might be worse than the disease,” he said.

President Arroyo has ordered the DOE to open the books of oil companies to see to it that their prices are at reasonable levels. Reyes said controlling oil prices may affect the supply of petroleum products.

 “We will get problems of threatened supply availability, if we impose a price ceiling. We must remember that this is essentially an imported commodity and the moment international price is higher than the ceiling, then who will import unless it is subsidized? So if it has to be subsidized then the Department of Finance will have to answer whether in fact they can subsidize it,” he said.

He pointed out that the proposal to include petroleum products in the price ceiling would be harmful not only to the consumers but also to the whole industry.

 “You’re trying to address a pricing problem but you end up with a supply problem. And that will be more disastrous he said. 

Besides, he said it is against the oil deregulation law to meddle in oil prices. 

“We cannot have or we cannot impose a price ceiling on petroleum products as it is against the law,” he said. 

He said under the law, the DOE’s power is confined to monitoring oil price movements which, in a way, could also be one form of “control”.

 “The thing is we must monitor the suggested retail prices (SRPs) and see to it that the SRPs – which, are set by the oil companies for their dealers – and the dealers are not supposed to sell higher than the SRP – so that’s one control,” he said.

 “The powers of the DOE are contained in the Oil Deregulation Act and we’re not even mentioned in the Price Act. Some of the departments are mentioned in the Price Act and the basic necessities and prime commodities. He said. 

He said the DOE has not been remiss in its duty to monitor oil prices and conduct audit on oil companies’ books, if necessary.

 “We will also continue to monitor the oil companies and we will continue with the audit and dialogue with them and see to it and ensure through our monitoring and audit of the books that the prices remain reasonable,” he said.

He also noted that liquefied petroleum gas (LPG) or cooking gas is considered a petroleum product and could not be subjected to a price ceiling. 

“LPG is a petroleum product so under the oil deregulation law you cannot have a price cap,” he said.