What’s holding the government from reviving the Oil Price Stabilization Fundor OSF
To cushion the spiraling prices in crude oil and gasoline the President is planning to expand the coverage of Ayuda, a euphemism for subsidy programs to include poverty groups in the transport sector such as jeepney and tricycle drivers and small flehmen.
The Department of the Interior and Local Government announced that over 600,000 tricycle drivers nationwide will receive fuel subsidies.
Do you think this is a sound and lasting solution? Do we have other serous-thinking government officials to suggest to the president other measures to make fuel subsidy an investment, or as business strategy? Can the Maharlika Fund include this petroleum problem an investment opportunity? Or is this another politically-induced strategy to maintain a problem and to offer a protracted solution to have a close grip on political capital?
The private oil companies will not have the social motivation to offer solutions because their profits are secured and not threatened. They have the global supply and demand system as a clever excuse.
The then President Ferdinand Marcos created the OPSF under Presidential Decree No. 1956 issued on Oct. 10, 1984. It was a strategy to cushion the oil price hikes through a buffer fund.
Under the decree, the OPSF was sourced from fuel taxes and was used “to reimburse the oil companies for cost increases on crude oil and imported petroleum products resulting from exchange rate adjustment and/or increase in world market prices of crude oil.”
During that time the government-owned petroleum company, PETRO, was still operational, hence part of the government’s rationale was also to protect the company.
DOE officials last week moved to discuss ways to help address the oil price increase. In June, the DOE announced its intent to ask the 19th Congress to prioritize the review of the oil price deregulation law. The agency wanted to get back the power and authority to intervene in the surge in prices of petroleum products. The result of that initiative is not yet announced.
The Philippines is a net oil importer so any movement in international oil prices would affect our pump prices. At present we are under a free trade agreement, and where the world market is controlled by the international contract. Under a free enterprise policy prices are set by private companies, not by the government, this is a catch.
Meanwhile, people witness the almost weekly fluctuation of prices in the gasoline stations, and by the looks of it, they are now getting used to it – as long as there is government AYUDA.