Smuggling may cause huge decline in oil prices

THE DEPARTMENT of Energy (DOE) has expressed concerns over the sudden and sustained huge decreases in oil prices “that may be breaching provisions under the existing law.”

 In a statement, the DOE has asked oil players in Mindanao to the unusual price reductions in gasoline products.

Based on the monitoring of the DOE-Mindanao Field Office (MFO), the price adjustment of the oil companies in Mindanao from Aug. 30 to Sept. 6 was a “huge P3 rollback, hence attracting the attention of the agency.”

“While price rollbacks like these are welcome development for the consumers, the DOE cautioned that sudden and sustained huge decreases in oil prices might qualify as anti-competitive behavior under the Oil Deregulation Law,” the DOE said.

This market behavior puts both smaller oil players and consumers at a disadvantageous position in the long run.

Smaller oil players may actually lose its market share and end up closing, thus remaining oil players may have the chance to dictate prices to the detriment of the consuming public.

According to the DOE, “bote-bote,” or the practice of reselling petroleum products in glass-bottled softdrink containers, and the smuggling of oil products from other countries may be the culprits.

“Currently, the DOE-MFO has already been coordinating with the local government units (LGUs) concerned and the Bureau of Fire to eliminate the ‘bote-bote’ and discourage consumers from patronizing such activity as this may endanger public safety and health,” the agency said.

“On the alleged smuggling of oil products, the DOE is now in talks with the Bureau of Customs as this may hurt not only the oil industry players but also the economy of LGUs in Mindanao and around the country for lost taxes affecting the delivery of basic services to our people.”

The DOE had already asked the city council here to implement a local ordinance that would crack down on the manufacture, sale and distribution of gas and butane products. The agency also asked the barangays to do their part in cracking down on the practice.

Posted in under_HEADLINES1