Villar: Are safeguards against oil cartel
enough under the deregulated setup?

In light of the unrestrained rise of oil prices, Senate President Manny Villar today said there is an urgent need to determine the usefulness of the oil deregulation law in preventing the existence of oil cartel in the country.

Villar filed Senate Resolution No. 216 urging the Senate committee on energy to look into the apparent lax implementation of safeguards in the Downstream Oil Deregulation Act of 1998 (Republic Act 8479) and the reported cartel existing in the oil industry, with the aim of crafting remedial laws that will cushion the impact of rising oil prices in the world market on the domestic economy.

Villar said, "Based on what the oil companies are doing, I have serious suspicions that a cartel is in operation," the Senate President said. "This is a clear violation of the law. Oil price hikes are simultaneously implemented in spite of the strengthening of our currency against the dollar."

Oil extended gains yesterday, nearing $95 a barrel as the dollar fell.

Cartelization is defined as "the agreement, combination or concerted action by refiners, importers or dealers to fix prices, restrict outputs or divide or allocate markets by products or areas in restraint of trade or free competition, including contractual stipulation which prescribes pricing levels and profit margins."

"This situation is prohibited in the United States though its oil industry is deregulated. Fuel prices vary from one gasoline station to another. That is what we want to happen here," the Nacionalista Party president stressed.

Villar said the Energy department is remiss in its responsibility, "The Energy department has the authority to look into this cartel as provided for in the Oil Deregulation Act. It should examine the books of oil companies and report violations to the public in safeguarding national interest," Villar said.

He emphasized, "We should have true guardians in the Energy department, not those who nurture friendship with oil companies."

Records reveal that almost nine out 10 liters of oil sold in the country come from three big players (out of 62 in the industry) - Pilipinas Shell, Caltex (Philippines) and Petron.

In his resolution, Villar also cited, "The energy consumption program being implemented by the Department of Energy has failed to bring immediate relief to the Filipino public, and there is a perception that the government as a whole has no credible energy program that will lessen the impact of rising oil prices on the economy and people's livelihood."

RA 8479 provides penalties to cartelization and predatory pricing: three to seven years imprisonment, and a fine ranging from P1 million to P2 million.