Gov’t to scrutinize ‘profit' of oil companies

Published June 21, 2022, 3:53 PM

by Myrna M. Velasco

With the never-ending upswing of oil prices, the government is getting razor-sharp on its drive to “scrutinize” the scale of profits oil companies may have been pocketing from the weekly price hikes.

According to Energy Undersecretary Gerardo Erguiza Jr., the “fuel cost unbundling” rule will be incorporated in a legislative measure that the Department of Energy (DOE) will be pushing when the next Congress will resume its session this July. This should become part of the amendments to Republic Act 8479 or the Downstream Oil Industry Deregulation Act.

On Tuesday’s Senate consultative meeting, Erguiza indicated that based on their calculation, the “industry take” of the oil companies in fuel prices had been at 19 percent while landed cost accounts for 51-percent, and a fraction of the costs passed on to consumers also factors in the taxes levied on petroleum products.

“The industry take is 19 percent — these include all other items that the oil companies have been adding on to the pump prices, that’s what we would want to inquire on,” the DOE official said.

Erguiza, nevertheless, stipulated that the DOE has its hands tied because its Department Circular which enforced the fuel cost unbundling policy had been stopped via temporary restraining orders (TROs) issued by the regional trial courts.

With that, he said “We submit to Congress to inquire on this, because we cannot do it because of the Court’s restraining order on the (fuel price) unbundling.”

The other plea the energy department wants to have an authority under the revised Oil Deregulation Law is to exercise “intervention” in the industry in times of extraordinary circumstances, such as the relentless price hikes that is now distressing the petroleum sector.

In a related development, House Assistant Minority Leader and ACT Teachers Party List Representative France Castro announced that she will be refiling House Bill 10386 or the Unbundling of Fuel Prices Bill in the 19th Congress “to make the pricing scheme transparent.”

If a legislated measure will already compel oil companies to itemize or segregate all cost components they have been passing on at the pumps, the solon noted that “consumers would finally see the oil pricing processes.”

She added “this is all in the spirit of transparency since the country is still under a pandemic and every peso means so much more, especially to the already economically-burdened consumers.”

The lawmaker further opined that “the big time oil price hikes again bring to the fore the issue of possible overpricing by (the) oil companies,” therefore, she emphasized that such “shows the need to unbundle or detail their price of fuel per liter.”

She qualified “except for the international price of oil, nobody knows the actual expenses of oil companies in selling fuel such as refining cost, storage, transportation, salaries and advertising cost.”

Castro propounded “the oil companies must inform DOE and the public of these actual costs, so that we will know if they are overpricing or not.”