Third, the law will sire an even more powerful oligopoly whose power to the market will take advantage of the consumers’ general welfare. Competition policy contains actions to keep or create competiveness in economic industries, which taking away the power of the government to take control of it, is included. These things may sound familiar, for many people now complain about these things against the government regularly. Included here are policies that ensure a competitive environment, which is in line with the goal of the Oil Deregulation Law. The digest also pointed out the control of foreign companies over the industry, where almost every operations in the country at the time is owned by these companies. The Constitution provided in Section 19, Article XII that deregulation must be only allowed if the public needs such action. This video is unavailable. AN ACT DEREGULATING THE DOWNSTREAM OIL INDUSTRY, AND FOR OTHER PURPOSES Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled: CHAPTER I GENERAL PROVISIONS SECTION I. The first solution seemed a long shot at the moment, with the administration of President Rodrigo Duterte seeking to pass the Comprehensive Tax Reform Program (CTRP). Of course, the, is a Filipino Christian historian and writer. A casual observer could commit to the rash conclusion of the ineffectiveness of the changed stance of the Philippine government. This was before the first “oil shock” in 1973, which saw soaring oil prices resulting from the decision made by the Organization of Petroleum Exporting Countries (OPEC). 27 Interposing economic arguments by the public respondents claim that price regulation is not beneficial to the public as well as to the economy. The focus has been on the legal basis of deregulation. This must not flee from our minds. The high court, however, denied the petition on the grounds, basically, that the argument of the petitioner is not against the law itself, but just against the timeliness of the provided duration for the full deregulation phase. - This Act shall be known as the “Downstream Oil Industry Deregulation Act of 1996.” SEC. Marya Salamat March 25, 2014 George San Mateo, Oil deregulation law, Piston. Here, we learn that the oil deregulation law is a product of the competition policy. 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. Declaration of Policy. No. be credited to the deregulation of the oil industry. While enumerating the grounds, this part will touch on the effects of the ODL to the oil industry, and to the people. 8180, which is the law discussed in the Supreme Court decision, was enacted. 19 B. To make things official, six months after the first phase, President Ramos signed an Executive Order that fully deregulates the oil industry. 8479 in August 1999 as a source, the first part of our literature review will discuss the unconstitutional provisions R. A. A. Due to Republic Act 8479 entitled “Downstream Oil Industry Deregulation Act of 1998” approved on February 10, 1998, the Philippine government effectively reduced its control on oil-related pricing activity and trade restrictions. The knowledge and to rescind or alter laws were the job of the legislation. They also claim that the short transition period was not against the mandate of the constitution because the new competitors were given enough time to set up their businesses in the manner captured at least 3% of the market share. 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. Marya Salamat February 10, 2015 1 Comment Oil cartel in the Philippines, Oil deregulation law, oil price hike. No. Competition Policy One of the most tremendous shift from the 1973 constitution to the 1987 constitution was the implementation of competition policy framework14 that will make sure that markets in the country is free from anti-competitive practices. Section 1. No. Then, it would bring about a free interaction of market forces that would eventually lead to hindrance of fair competition in the market. 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, What was the economic state of the Philippines before the enforcement of the RA 8479? Section 14 of the Downstream Oil Industry Deregulation Act of 1998 mandates the DOE to monitor and publish daily international crude oil prices, as well as follow the movements of domestic oil … Relevance. What makes this an alternative to the OPSF is that the country does not keep prices down by pouring in money to oil companies. The Philippines is presently having serious concerns with the effects brought by Oil Deregulation Law.1 As the fact that it permits oil companies to freely adjust their oil prices that led to the increase of other basic commodities and resulted to economic crisis as people defined.2. 12. 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. Contained in a November 5, 1997 Supreme Court decision, which deemed the first oil deregulation law, the Republic Act No. 13 Given these issues, it would seem that the oil deregulation law is unconstitutional, a fact which the paper seeks to determine. The exchange rate continues to be market-oriented with the BSP participating in the foreign exchange market when warranted to minimize unwanted fluctuations.RA 8479 (Downstream Oil Industry Deregulation Act of 1998) was approved on 10 February 1998. The transparency of the oil prices has been an issue for the consumers as oil price hikes have not stopped since the law was approved by the congress. 8479 February 10, 1998. DOE Circular No. 8479, which is to deregulate and liberalize the downstream oil industry to ensure a truly competitive market under a regime of fair prices, adequate and continuous supply, environmentally clean and high-quality gasoline products, would be demoralize. 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. Signed on February 10, 1998, RA 8479 or the Downstream Oil Industry Deregulation Act of 1998 liberalized the industry to ensure a competitive market. Oil deregulation law ipinababasura sa gitna ng biggest price hike ng 2019 James Relativo (Philstar.com) - September 24, 2019 - 5:04pm 62 and now it went up to 300% ranging from P48. Watch Queue Queue In the transition phase, all non-pricing facets were lifted. The years that passed for Philippine deregulation of the oil industry has its own successes and failures. The automatic oil pricing mechanism was maintained in order to estimate the local prices of gasoline products in the global market. SAMPLE. He added that conviction against monopolies and combination in restraint of trade should be given legal consequence by the court. AN ACT DEREGULATING THE DOWNSTREAM OIL INDUSTRY, AND FOR OTHER PURPOSES Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled. Republic Act No. CHAPTER I GENERAL PROVISIONS SECTION 1. The act allowed oil companies to set their own prices. 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 … Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled: CHAPTER I. However, for every action, anticipate the consequences. 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. 8479. Cmty. No. However, in 2008 the reserve was decreased to 64 days of supply. Hi Al, your blog has been nominated for the Blogger Recognition Award. Lastly, he also pointed out that reviewing the wisdom of the law is not a power of the judiciary, that power is only vested in the congress. Enrique Garcia criticizing the very short duration (five months) before the full deregulation phase be effective provided in Section 19 of the Act. 16 Sources of market failure are also discussed, which a monopoly can cause. Also what would be the benefits of having the government regulate the oil price? 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.” 26 Subsequently, respondents claim that the decorum of full deregulation is a non-justifiable issue for it involves the perception of congress and the acceleration was also recommended by the DOE and DOF because of the two conditions that were discussed earlier. B. Rallyists also seek an oil price rollback and the nationalization of the oil industry in the country. The second one will be about the transition from RA 8180 to RA 8479. Kindly click this link to read the full article: https://firstfilipino.blogspot.com/2017/08/first-filipino-gets-real-blogger.html. 8180 to R. A. It is therefore in both private and public interests that the policy’s actual effect and its constitutionality be tested through empirical analyses. 8479 which could have given the incoming competitors tough time to be able to keep up with the resources that the big three companies already own. 8180 that was not present in the revamped R. A. A petition was filed by Cong. PNOC, operating as PETRON, was the first Philippine-owned Corporation in the market. 8479 will be analyzed to give a brief background regarding the law. The CTRP includes the maintenance of the current VAT on oil products, and a three-phase increase in excise tax on oil. The literature gave the definition of an oligopolistic market and indications of anti-competitive practices. While it has the potential to increase government income from petroleum, it will also mean higher rates for consumers. All of these components are essential to achieve competitiveness in markets, correction of market failure, and enhancement of consumer welfare. Contained in a November 5, 1997 Supreme Court decision, which deemed the first oil deregulation law, the Republic Act No. The first one is the goal of the oil deregulation law, to have a perfect competition in the oil market. If there is a monopoly in a market, income distribution is minimal. Gatchalian noted, however, that there is a need for transparency in the pricing mechanism for pump prices of fuel products. It also violates the goal of the oil deregulation law, which is to make the oil market competitive under a system of fair prices. 8180, to be unconstitutional1, is a brief history of the Philippine oil industry. Economically, is it really favorable to the Filipino people or the favor only applies to the corporations involved in the downstream oil industry? A democratic government such us the Philippines’ is, after all, by definition supposed to cater to public interest and welfare. Congratulations! The Big 3 saw their combined market share decline to 85 percent in 2006. Shell Corp. filed a rejoinder and further added that if Sec. What are the bad effect of the Oil Deregulation Law in the Philippines? Petron Corp. , a respondent, pointed out that a short transition period is beneficial to new players coming in for they will be able to set up their business properly within a manageable time, to set up their prices, taking into account their investment and operating costs. Phase one, the transition phase which started in August 1996, aims to take away control over non-pricing related aspects while phase two, the full deregulation phase, now includes the pricing itself, which abolishes the OPSF. - It shall be He also said that true competition exists only when there can be a sizable number of players, and at that time there was only 3% of the market share which belongs to new competitors. The DOE should give the consumers assurance on the pricing, for they are obliged to monitor increases in the gas prices from time to time. What the government can do is effective enforcement and implementation of the law. For he claims that Sec. 8479 will form a task force with members of the DOJ and DOE to investigate anomalies in the deregulated oil industry. This Circular establishes the procedures for the Philippine contracting round in petroleum prospective areas. 19, not the essence of it. They added that the acceleration of full deregulation is based on existing conditions and sound economic theory. 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. Anonymous. The petition of Rep. Garcia regarding the unconstitutionality of Sec. The oil deregulation law’s goal is part of the framework that the constitution wants to achieve. 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. Short Title. No. After scrapping all the unconstitutional provision that made the ODL of 1998 to be successfully enacted, does the new law is clear of any constitution-violation? As the main source of the last part, the fairly recent paper entitled “Philippine Oil Deregulation and the Oil Crisis: A Policy Issue Paper” by Marlou Mumar of University of the Philippines. that the 1987 constitution adapted. However, the actualization of the ideals of the framework seems lacking in the reality that most of these industries remain structurally monopolistic or oligopolistic. In reviewing the constitutionality of the Republic Act 8479, it is necessary to know what was changed from the first oil deregulation law which was the Republic Act 8180, “An Act Deregulating the Downstream Oil Industry of 1996”. Proposed solution # 2 (scrap/repeal the Oil Deregulation Law) is therefore a better option. However, the state of the oil industry then and now is different, and it would take a different strategy to deal with a different problem. GET YOUR CUSTOM ESSAY The Oil Price Stabilization Fund (OPSF) was then created,2 in 1984, as a buffer against the fluctuations in oil prices. 8479. The last three solutions presented explored what the government can do beyond tweaking the legal provisions of deregulation… 7 Fast-forward to today, many petitions has been filed to repeal or amend the act but not one has been actually successful. In a budget hearing in Congress, DOE Assista Watch Queue Queue. To break the foreigners’ control, with President Marcos’ initiative, the Philippine National Oil Corporation (PNOC). Under the Cory Aquino administration, the Energy Regulatory Board (ERB) was created with the purpose of, much the same as the functions of the OIC, regulating operations of oil companies with the addition of paying the OPSF to recover the importer’s expense from importing whenever there is petroleum product-deficit to temporarily adjust price levels, among others. The DOE must be beyond “, An alternative to the OPSF can be found in the United States example. 8180, to be unconstitutional1, is a brief history of the Philippine oil industry. These things can be solved with prohibitions or authorizations, which are few examples of solution for anti-competitive practices. Ang may mga hawak nito ay ang The Big Three (shell, petron at Caltex) na kung saan sila-sila na lamang ang nagdidikta ng presyo ng langis dahil sa kanilang mga ispekulasyon ng di-umanong “shortage”. There was a time when the country had four refining (Bataan Refining, Filoil, Caltex, Shell) and six marketing companies (Esso, Filoil, Caltex, Getty, Mobil, Shell). Section 1. In his petition, he said that the Sec. FOR ONLY $13.90/PAGE, Deregulation of media access and rates increasing…, Comparative Analysis of the Family Code and Code of…, Planned Parenthood of Southeastern Pennsylvania v. Casey. Included in the interview will be possible solutions, amendments or replacements to the still-contentious Oil Deregulation Law. If, however, the opposite has been concluded and the oil deregulation is in fact deemed to attain its goals, the government must focus its energies towards ensuring that the expected benefits are actually felt by consumers. Ramos, is pro-oligopoly, anti-competitive, and is against the economic welfare of the people. Republic Act (RA) 8479 was passed into law in 1998. Even though there are more than 600 companies in the industry and competition seems to be fair within the oil industry,8 the problem still exists — the high prices of petroleum products which has a domino effect to everything in the country. Discussed in this part are bills that seek to either amend or repeal the ODL, the grounds that makes the law unconstitutional and the violated provision in the Constitution. So Oil Deregulation is a big mistake made by the government? 8479. 65 to P54. Statement of the Problem The 1987 Constitution has entailed the adaptation of an implicit competition policy framework which refers to all laws, government policies and regulations aimed at the establishment and maintenance of competition that aims to promote, advance, and ensure competitive market conditions by the removal, as well as to redress anti-competitive results of, public and private restrictive practices. He also pointed out that to execute full deregulation depending on the number of new players would be to legislate a floating provision reliant on the happening of a conditional event. Wednesday, December 7, 2016. Also, consumer welfare is not guaranteed for monopolistic practices produce abusive price controls and inefficient production. The researchers will interview lawyers to see if there is an unconstitutional provision within the act’s content and from economists to assess if the effects from the act’s implementation is really in a positive note. 20 In this topic, a case study of the petition of honorable Enrique T. Garcia in 1999 against the 1998 Oil Deregulation Law is essential to know if R. A. No. Many argue that the oil industry is an oligopoly of the big three (Petron, Shell, and Caltex), meaning that they can influence the price and output of the market by themselves. In this agreement, collusion between companies happen. To sort out pricing The Department of Energy (DOE) is pushing for new amendments to Republic Act 8479 or the Downstream Oil Industry Deregulation Act – and the specific agenda this time is to define “fair pricing adjustment” at the retail pumps. The focus has been on the legal basis of deregulation. And therefore, the law was processed unconstitutionally for being foul and disparaging infringement of the constitutional policy and command embodied in Article XII, Section 19 of the 1987 constitution against monopolies and combinations in restraint of trade. The time when the current oil deregulation law was enacted, February 1998, gasoline costs around just P12. Gregorio del Pilar's Last Stand, An aerial shot of the Strategic Petroleum Reserve in Texas, Workers rally for repealing oil deregulation. ICLG - Oil & Gas Laws and Regulations - covers common issues in oil and gas laws and regulations – including development of oil and natural gas,import/export of natural gas, LNG, import/export of oil, transportation, transmission and distribution and foreign investment – in 29 jurisdictions. The statement by the Philippines Tariff Commission about competition policy is an evidence that the government should issue anti-competitive practices in the country. 8180 AN ACT DEREGULATING THE DOWNSTREAM OIL INDUSTRY, AND FOR OTHER PURPOSES Be it enacted by the Senate and House of representative of the Philippines in Congress assembled: CHAPTER I – GENERAL PROVISIONS SECTION 1. 24 And because of that, the law is a very vital and grave abuse of discretion on the part of the legislative and executive branches of government. GENERAL PROVISIONS. Because of this, the study will be able to give comparison as to the success of other deregulation laws. Boys Who Cry? 4 In March 1996, Republic Act No. The most controversial issue surrounding the act is the overpriced petroleum products and frequent increases, with vague reasons, but seldom rollbacks like a two-step-forward-one-step-backward situation. 19 should be declared null and void for the transition and full deregulation should have price controls that should protect the public interest from the big three oligopoly’s price fixing and overpricing. 8180 was too much for the new competitors to compete with the established oil companies here in the country. The last one was the issue on predatory pricing; Congressman Tinge suggested the Arena-Turner test and proposed to redefine predatory pricing. Effects of the oil industry and is to be done within two phases the five-month transition phase President... 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