ROXAS: MULTI-PRONGED APPROACH NEEDED VS. OIL PRICE HIKES
LONG-TERM SOLUTION SOUGHT, WORLD OIL DEMAND SCENARIO LONG-TERM

With the world oil price scenario not seen to be improving due to increasing demand from highly developing countries, Senator Mar Roxas called for a multi-pronged approach to solving the problem of increasing domestic fuel price hikes.

While more hearings would be needed to lay down all options on the table, Roxas said the hearing conducted today by the Senate Trade Committee has brought about several options already, including crafting antitrust legislation, amendments to the Downstream Oil Deregulation Law, and reviewing all import duties and taxes imposed on crude oil and finished oil products.

"Aaralin natin kung talaga namang sapat ang supervision ng Department of Energy sa mga oil companies na ito. Sang-ayon sa Oil Deregulation law, mayroong kapangyarihan ang Secretary of Energy na buksan at busisiin ang mga libro ng oil companies," Roxas said.

"Aalamin din natin mula sa Department of Finance, sa Customs at sa Tariff Commission, kung ano ang mga pinapataw na mga taripa, mga buwis at iba pang bayarin sa mga produktong ito. Sa ganoong paraan, ma-e-estimate natin kung meron nga bang kaginhawaan na maidudulot kung mabawasan ang mga buwis at bayaring ito," he added.

He stressed that the visitorial powers by the DOE Secretary under the Oil Deregulation Law should have been one mechanism to check oil companies against abuses, but previous DOE secretaries have refused to use this. He is looking forward to current DOE Secretary Angelo Reyes' pledge to use this power, beginning this Friday during a consultation.

"Sa batas ngayon, may kapangyarihan ang DOE na buklatin lahat itong mga libro ng mga oil companies. Ito naman talaga ang matagal na nating disagreement sa mga nakaraang DOE secretary, na ayaw nilang gamitin ang kapangyarihan na ipinagkaloob sa kanila ng batas," he said.

"Ngayon, mayroon tayong Secretary na gagamitin niya ang kapangyarihang ito, at sinusuportahan natin siya dito," he added.

Roxas announced that a sub-committee would be formed, to be headed by Senator Juan Ponce Enrile, to focus on crafting an antitrust law that could be used to discipline companies that engage in anti-competitive behavior such as collusion and other restrictions to trade. Enrile has been advocating for an antitrust law, and is author of the same in the 13th and 14th Congresses.

"Papatibayin din natin ang antitrust legislation nang sa ganoong paraan, maliban sa visitorial powers niya sa libro ng mga kompanya, magkakaroon siya ng batas na magagamit na panghampas sa mga umaabuso," he added.

The hearing was attended not only by government officials but also by representatives of oil companies, transport groups and consumer groups.

"I appreciate the cooperation of all sectors in helping us comprehend this multi-faceted issue of oil prices. Our recommendations and subsequent legislation dealing with the price hikes will be based on creating a more fair and transparent pricing system," Roxas said.

Secretary Reyes noted in today's hearing that the current levels of fuel prices are P0.71 higher in August 2007 than in the same period last year. Despite world oil prices at record-high levels of over $90 a barrel from about $70 in 2006, Reyes said the strong performance of the peso helped buffer even further increases than those at present.

"Kung nasa P55 to a dollar tayo, ang presyo ng gasolina sa pump would have been P8 more. >From the current price of gasoline, P43.95 per liter, it would have been P51.95 per liter," Reyes said.

Players in the industry however noted that the foreign exchange rate and world oil prices are not the only factors involved, and that premium and freight charges in the importation of oil must be considered.

"For example, a refinery in Taiwan would prefer a higher grade with a higher premium. Also, the cost of transportation now is much higher, because of corresponding higher costs in diesel," Eastern Petroleum Companies Association President Fernando Martinez said.

Petron Vice-President for Marketing Joey Campos noted that since enactment of Downstream Oil Industry Deregulation Act of 1998, oil companies' profit margins have gone down, with the entry of hundreds of other players in the industry.

"We can say our margins were more attractive during the time that we were regulated� If our margins are not as good today, we can say that this is really a result of the competition that prevails in the market," Campos said.

On the other hand, transport sectors hit what they perceived as a "cartel" in the oil industry, and called for a review, even for a repeal, of the Oil Deregulation Law.

"Sabi noon, ang Oil Deregulation Law ay magpu-push ng pagbaba ng presyo ng langis dahil magkakaroon ng new players at mag-e-entice ng competition. But there is no free competition existing, which is the premise of the law. Dahil walang free competition, mas lalong nangangailangan ng regulation," Pinag-isang Samahan ng mga Tsuper at Operators Nationwide (PISTON) Secretary-General George San Mateo told the committee.

Roxas said, "We are deeply concerned over the grievances aired in today's hearing by the transport sector, and it will be a basis for any action we take in proposing amendments to the Oil Deregulation Law."