Oil players may be jailed for unfair price hikes

Denying that that the Aquino administration keeps failing to keep fuel prices low, Department of Energy (DOE) Secretary Jose Rene Almendras said oil players found unfairly manipulating oil prices could face imprisonment. In a briefer on fuel prices delivered Monday afternoon, Almendras was asked whether government was satisfied with the explanation given by oil companies that they raised their prices because of “market forces," or would government penalize oil companies that raised prices higher than the DOE’s computations. He replied, “The law is clear. If the joint task force feels that there is an abuse — the joint DOE-DOJ task force — we’ll file a case in court and subsequently the appropriate action will be followed depending on the law." "The Oil Deregulation Law says they may be put to jail," Alemendras said.
For the latest Philippine news stories and videos, visit GMANews.TV A joint task force of the DOE and the DOJ is investigating the latest fuel price hike imposed last week by some oil firms. He confirmed that oil companies that raised pump prices the previous week “have been informed that they are to explain in writing the basis for their increase." He clarified, however, that this preliminary investigation was not yet a criminal investigation but rather a requirement of the Oil Deregulation Law. He said that if the DOJ-DOE task force has basis to say there was abuse then “their next course, according to the Deregulation Law, is to take it to the courts." But the Energy secretary was quick to clarify that the DOE has yet to receive the reply of oil companies in writing in the next 10 to 15 days. He said the joint DOE-DOJ task force has to meet and evaluate, in order to look at the numbers, before coming up with an opinion to base a decision on how to pursue beyond that point. President Benigno Aquino III on April 20 urged oil companies to open their financial records to public scrutiny, in the wake of oil price hikes. Oil companies under investigation “Going back to last week’s oil hikes, I know a lot of people are asking what exactly happened," Almendras said. “There is an impression na nagkagulo tayo last week although we did not." He said that on April 18 his department met with stakeholders, noting, “all the transport groups were there." He said they made some calculations, adding, “we had a very clear view on what the increases should have been." Regarding the DOE’s computation of a 40-centavo price hike versus the actual 60-centavo price-hike oil companies imposed, Almendras said: “Now, whether the 20 centavos is enough to call for an investigation or not, we’re saying every centavo counts." “Well, this is the third or the fourth time since we assumed office, that we have asked oil companies to explain the discrepancy. There was one time the difference was only 6 centavos, but we asked them to explain it. Pero at that time, the DOJ-DOE task force was not activated so I did not have to refer it to that task force," he added. Asked which oil companies were involved, the Energy secretary declined to name which ones exactly. “I don’t know the exact ones," he said. “We’re verifying that because a lot of the smaller, independent [oil firms] did not increase. So the two large ones increased; one rolled back; the other did not. So I guess the one that did not rollback is the one that needs to explain. The question on whether the one which rolled back also has to explain, we leave it to the task force to determine." Failing to keep oil prices down Almendras was asked to respond to the April 19 accusation made by former Arroyo administration spokesperson Elena Bautista-Horn that the Aquino administration had failed to temper the increase in oil prices. “I wasn’t around in 2008," he said, alluding to the all time high of world crude prices that spiked to $147.27 per barrel in July 2008. He then cited public records and business data regarding today’s world crude prices. “To clarify, the oil price mentioned in news reports of $110 per barrel is not an accurate reference since it is based on the WTI, the benchmark used for fuel pricing in North America," he pointed out. “The local oil industry bases its prices on Dubai Crude and Mean of Platts Singapore (MOPS). For reference, Dubai crude is $115 per barrel as of April 2011 compared to $89 per barrel in December 2010," he explained. “To compare, in August 2008 MOPS Diesel is at $135.26 per barrel and pump prices were at around P56.15 per liter. This April 2011, MOPS Diesel is at $139.94/barrel and pump price is only at P47.43/liter," he said.

Reconsidering oil price freeze? On whether the Aquino administration would reconsider freezing oil prices, Almendras said the legality of such an administrative action was best left to the courts. He recalled that the previous administration had raised to the Court of Appeals a decision by a regional trial court that struck down such an oil price freeze but “then it became moot and academic because prices went down." He said, however, that the law allows the President to regulate oil prices in a state of emergency. He said: “Problem is what do you define as emergency? At the end of the day… I believe that the decision would be based on the situation at that point in time. It probably depends at how much inventory we have or how much potential supply disruptions had such actions can be. So there will be many considerations." As to monitoring price increases instead of putting a cap on oil prices, Almendras stressed the “need to distinguish between action and monitoring." “Monitoring is just to study and get the data and analyze it," he explained. “Subsequently, actions can be taken relative to that. Actions are really a degree of what the government decides to do and one such action you may identify is really the possibility of raising prices. It is not the only action there is. There are many other mechanisms that can be used such as cushioning the specific sectors." On monitoring oil prices, he said : “We have engaged various groups; we now are using just for comparison four separate formulas that we have made public." He said his department was “more than willing to listen on how to go about it" and after working with those “quite critical" with them, they had even “adjusted some" of the DOE’s views. “It is the most transparent mechanism today available to us." “Is the spot-reference pricing something we like to do? Well, because the world has been using it for the past 25 years and …no option is more transparent than it is and we continue to use it," Almendras said. — VS, GMA News