Is there a local oil cartel? DOE chief won't say there's none

Department of Energy (DOE) officer-in-charge Sharon Garin has weighed in on the issue of cartelization in the country’s petroleum retailing sector amid the recent fluctuations in pump prices triggered by the Middle East conflict.

At a press conference in Taguig City on Wednesday, Garin was asked if a local oil cartel is influencing fuel price movements.

In response, the acting Energy chief said, “I would not say that there is no cartel. Who they are, that is something to confirm but if there is no cartel, there’s no purpose for OIMB (Oil Industry Management Bureau) to be on guard all the time.”

“But I would say there's still some form of anti-competitive behavior in some, not all. There are still some activities that are not in the best interest of the public… for example, there are still problems in the industry [like] there are gas stations whose prices are P10 less than others and that could mean something. Maybe that's good for the country, but that could also be something that there is some smuggling, but those are still speculations,” she added..

The acting Energy chief, however, said that the DOE has no enforcement powers to curtail supposed anti-competitive behavior in the downstream oil industry.

“If we do observe possible smuggling activity we report it to BOC (Bureau of Customs), or any declaration on the part of the oil companies we report it to the BIR (Bureau of Internal Revenue) or DOF (Department of Finance)… or any anti-competitive behavior, then it’s Philippine Competition Commission or ERC (Energy Regulatory Commission),” Garin said.

“So we are the agency that can make the observations and report them to the proper agency,” she added.

On uniform price adjustments

The DOE officer-in-charge was also asked if the uniform price adjustments among oil companies could be a form of collusion.

Garin said, “This has been a practice that they have been doing… I think there is also coordination among them, because to avoid, I guess, it could be disadvantageous if others’ adjustments were lower so they are trying to protect their own businesses.”

“I don’t think it’s an issue of why their increases or reductions are the same… I think our issue here at the DOE is how do you compute your increase or decrease,” she said.

“Unfortunately though, we are not given the authority, not even just to disclose or to investigate their reporting, we just need to monitor if it matches the increases of the adjustments in the international market,” she added.

DOE-OIMB Assistant Director Rodela Romero said the weekly adjustments being reported by fuel firms are correct as far as the benchmark Mean of Platts Singapore (MOPS) for finished petroleum products and Dubai crude are concerned.

“Despite the similar weekly adjustments… The range really matters at the end of the day for gas stations. For instance, gasoline in this area, despite the same adjustment, the price is still low in that particular area. That's the reason why we have the so-called competition on the ground level. There are price wars in particular areas,” Romero said.—LDF, GMA Integrated News