THE Downstream Oil Industry Deregulation Act should be revisited as the country remains highly exposed to international oil prices and supply disruptions, an energy think tank official said on Tuesday.
“The current volatility in global oil markets highlights the continuing need for the Philippines for energy self-sufficiency and to reduce dependence on imported energy resources, particularly conventional fuel such as oil, coal and gas,” Philippine Energy Research & Policy Institute board member Jose Layug Jr. said in a statement.
While the law, passed in 1998, led to the liberalization of the downstream oil sector and opened up competition, local fuel prices remain highly susceptible to international developments, he said.
“[A]s we continue to rely on imported fuels, this dilemma will never end until the Philippines becomes energy independent,” Layug said.
The government has been working to reduce the country’s dependence on imports via renewable energy auctions and contracting rounds for oil, coal and gas, but taking projects to operational status will take time, he noted.
With oil prices surging in the wake of war in the Middle East, Layug proposed increased social triggers for programs such as the Pantawid Pasada, which provides subsidies to the transport sector to mitigate the impact of costlier fuel.
An energy contingency plan that will guide responses to energy supply disruptions should also be established, he said.
The plan “will outline the basic elements needed to start off national preparedness, awareness and response programs to protect consumers without undermining the gains of market liberalization,” Layug said.
“For example, on a short-term basis, tax adjustments, fuel conservation programs and digital measures may be considered to cushion the impact on end-users to help lessen the impact,” he added.
“Then for the medium term, the government should establish a strategic petroleum reserve managed by the Philippine National Oil Co. to strengthen the country’s ability to respond to supply disruptions and target a 90-day national oil reserve capacity to buffer supply disruptions. The Philippines should also explore strategic international partnerships with other countries, such as Brunei and Indonesia, to secure emergency fuel supplies.”
“Then for long-term purposes, the Philippines should continue in enhancing incentives to entice more investments in upstream Iidigenous oil and gas exploration, and the utilization of renewable energy resources in order for us to be energy independent and not rely on others for our energy needs,” Layug continued.
