Herrera backs compromise on Oil Exchange

Rep. Ernesto Herrera (Lakas, Bohol) supported yesterday a compromise suggested by The STAR columnist Federico Pascual on the proposed establishment of an oil exchange.

"The compromise effectively cancels out all the major objections (of the oil companies and administration officials) to the proposed oil exchange," Herrera told a news conference.

He said Petron, one of the three big oil firms in the country, was reportedly in favor of Pascual's suggestion.

The creation of a National Oil Exchange Corp. was proposed by Rep. Enrique Garcia in a bill co-authored by the majority of the 220 members of the House of Representatives.

The envisioned government firm would bid out to the world's oil producers and traders, on a monthly basis, the country's requirements of petroleum products.

The idea is to obtain the lowest possible price for consumers. Petron, Caltex and Shell would be allowed to participate in the bidding.

Commenting on Garcia's proposal, Petron officials were quoted as saying they could live with it but would have to discard their refineries and engage in trading.

Energy Secretary Mario Tiaoqui has described the proposal as "monopolistic" since only one corporation would do the buying, reducing the oil companies to traders.

Pascual has suggested that a national oil exchange be set up and be allowed to do parallel procurement operations along with Petron, Caltex and Shell.

He said the Big 3 can keep their refineries, gas stations and other facilities, and can buy their crude oil requirements on their own.

The oil exchange would procure petroleum products from the lowest bidder and sell to other gasoline stations and end-users.

Herrera said Tiaoqui and the oil companies should have no objections to the compromise proposal which, he added, does not conflict with the government's deregulation policy and whose objective is to bring down oil prices.

"If these firms are afraid of this suggestion, then they must be hiding something. They do not want prices to go down as this could expose their alleged overpricing of petroleum products," he said.--