For the second part of this series, read here. - This Act shall be known as the “Downstream Oil Industry Deregulation Act of 1996.” SEC.2. D. Significance of the Study In the Philippines, the downstream oil industry remains a highly controversial aspect of the economy in spite, or perhaps because of, the implementation of full deregulation that started in 1998. I see that if one takes away something, another has to take its place – re-regulation. – This Act shall be known as the "Downstream Oil Industry Deregulation Act of 1998. It also claimed that an indefinite period of time would only discourage new players for they hoped that the price regulation would be lifted within a reasonable time. Whether direct or indirect, whatever policy the government shall take will have an advantageous or disadvantageous effect. To provide a more broad view on the matter being discussed, the author interviewed five people from different sectors and of different specializations. Declaration of Policy. Read the rest of this entry . What makes this an alternative to the OPSF is that the country does not keep prices down by pouring in money to oil companies. Due to an oil crisis’ occurrence in 1997, the government created the Oil Industry Commission (OIC) to regulate the goings-on of businesses working with oil. In this market structure, there are several players entering in and out of the industry, selling similar products with fair competition. With the eradication of the Oil Price Stabilization Fund (OPSF), a buffer fund was made to cover increases of petroleum products, with the exception of premium gasoline. It is notable that the so-called Big 3 oil players (Petron, Chevron and Shell) used to corner nearly 100 percent of the Philippine petroleum market before the passage of the Downstream Oil Industry Deregulation Act of 1998. A better idea is all that it takes. Historically, the Philippine oil industry has been deregulated. 5 Its unconstitutionality was because of the violation against a Constitutional provision that states “the State shall regulate or prohibit monopolies when public interest so requires. II. A market-oriented formula was also approved by the Energy Regulatory Board (ERB) to know the wholesale posted price of gasoline products to be determined by the adjustments of the Singapore Posting of refined petroleum products, the Singapore Import Parity or the crude landed cost. “As the oil price situation worsens, we call for the removal of the excise tax on oil and petroleum products and the junking of the Oil Deregulation Law,” the group said in a statement. The oil deregulation law’s goal is part of the framework that the constitution wants to achieve. Coverage These rules shall apply to all persons or entities engaged in any, a combination of, or all activities or business of the downstream oil industry, such as importing, exporting, re-exporting, shipping, transporting, processing, refining, 19 is anti-competitive, thus it is contrary to what the constitution says. In a budget hearing in Congress, DOE Assistant Secretary Leonido J. Pulido III disclosed that the department is “collaborating with the Philippine Competition Commission precisely because the Oil Deregulation Law failed to define what is unfair or unjust pricing – and that’s one of the challenges that the DOE is facing when it comes to monitoring prices.” 8180 that was not present in the revamped R. A. The DOE was created by virtue of RA 7638. 8180, to be unconstitutional1, is a brief history of the Philippine oil industry. This site contains quotes, articles, ebooks, and other related documents on Philippine historical studies.Philippine History Source Materials. 19 were to be dismissed, there will never be full deregulation and would provide a new law that is different from what was already enacted. A petition was filed by Cong. Horizontal agreements, where firms agree to the pricing of a good, giving them ability to control prices. They added that the acceleration of full deregulation is based on existing conditions and sound economic theory. REPUBLIC ACT NO. Boys Who Cry? 471 in March 14, 1998. Answer Save. The transition period should last up to five months following the enactment of the law but with the power granted to him at that time, President Fidel V. Ramos accelerated the start of full deregulation through E. O. The first one was declared by the Supreme Court unconstitutional in November 5, 1997 for mainly three reasons. Wednesday, December 7, 2016. All he said points out to the question, whether or not the execution of deregulating the oil industry conflicts the mandate of free competition under section 19, Article XII of the 1987 constitution. Lastly, because of the hastened transition, he pointed out that Sec. However, for every action, anticipate the consequences. Sources used in this part will cover news articles, House and Senate bills. However, the actualization of the ideals of the framework seems lacking in the reality that most of these industries remain structurally monopolistic or oligopolistic. Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled: CHAPTER I GENERAL PROVISIONS. To further ensure that the rights of the consumers are protected, R. A. MANILA, Philippines Sen. Sherwin Gatchalian is contemplating a review of the Oil Deregulation Law to impose stricter monitoring of oil inventories and price hikes and harsher penalties for non-compliant oil companies and negligent government … It is therefore in both private and public interests that the policy’s actual effect and its constitutionality be tested through empirical analyses. Short Title. If the idustry is deregulated quality of products can decline and there could be consolidation of existing providers leading to monopoly pricing of oil and gas. Proposed solution # 2 (scrap/repeal the Oil Deregulation Law) is therefore a better option. Economically, is it really favorable to the Filipino people or the favor only applies to the corporations involved in the downstream oil industry? Please, specify your valid email address, Remember that this is just a sample essay and since it might not be original, we do not recommend to submit it. Or in other countries as well. The statement by the Philippines Tariff Commission about competition policy is an evidence that the government should issue anti-competitive practices in the country. While it has the potential to increase government income from petroleum, it will also mean higher rates for consumers. The last three solutions presented explored what the government can do beyond tweaking the legal provisions of deregulation. First, the provisions laid down were already advantageous to the major competitors; it will give more power to the oligopoly of the big three. 2. Contained in a November 5, 1997 Supreme Court decision, which deemed the first oil deregulation law, the Republic Act No. No combinations in restraint of trade or unfair competition shall be allowed. 19 B. 15 Market structures are also enumerated and described here. In his petition, he said that the Sec. Piston submits 7 demands to Aquino. DOE Circular No. ”6 The Supreme Court points out that the act does not make a truly competitive market because of the 4% difference on the tax imposition on existing businesses versus new comers. be credited to the deregulation of the oil industry. The Supreme Court decision said the 1996 law created unfair advantages for the three long-established oil companies: Petron Corp., Pilipinas Shell Petroleum Corp. and Caltex (Philippines) Inc. 18 Although there are no developed legislation relating to anti-trust and monopoly activities, a competition policy framework is a strong backbone to safeguard consumer welfare. 12. Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled: CHAPTER I. What are the bad effect of the Oil Deregulation Law in the Philippines? The minimum inventory level requirement was also removed from the R. A. All of these components are essential to achieve competitiveness in markets, correction of market failure, and enhancement of consumer welfare. The petition seeks to know if the new oil deregulation law is indeed constitutional and will ensure equal competitive market and welfare of its consumers. 8479 which grants for the five-month transition phase, shortened by Pres. The law seeks to attain “a truly competitive market that runs with fair prices and a suitable supply of environmentally-clean and high quality petroleum products. But repealing the Deregulation Law is not the ultimate answer to the rise in oil … The oil deregulation law’s goal is part of the framework that the constitution wants to achieve. 1 decade ago . This assumption will be studied later on. 19 Article XII “which commands the state to prohibit or regulate monopolies for public interest,” the oil deregulation law have become one of the most questionable laws in the country. Anonymous. From … Gregorio del Pilar's Last Stand, An aerial shot of the Strategic Petroleum Reserve in Texas, Workers rally for repealing oil deregulation. A democratic government such us the Philippines’ is, after all, by definition supposed to cater to public interest and welfare. that the 1987 constitution adapted. His decision was supported by the DOE and DOF because of two reasons: (1) the prices of crude oil and petroleum products in the world market are beginning to be stable and on a downtrend since January 1998; and (2) the exchange rate of the peso in relation to the US dollar has been stable for the past three months, averaging at around P40. website. Policy issues are within the domain of the political branches of government and of the people themselves as the repository of all state powers. Dist. 8479• Downstream Oil Industry Deregulation Actof 1998• Complete no government interference• DTI as monitorIn the Philippines…Oil DeregulationFin 111 – AY02 18. 30, 47 Bergen St--Floor 3, Brooklyn, NY 11201, USA, Sorry, but copying text is forbidden on this Section 1. 9 Part of the competition policy framework is the liberalization and deregulation of select Philippine industries such as the maritime industry, civil aviation, telecommunications, energy and utilities. Watch Queue Queue To break the foreigners’ control, with President Marcos’ initiative, the Philippine National Oil Corporation (PNOC).