The Mechanism of Philippine Oil Pricing: A Study in Economic Imperialism

Abstract

The paper will closely examine the government’s argument for the new oil price increase. It will answer inquiries on whether or not the local oil companies are really losing. The three big oil companies—Caltex, Pilipinas Shell, and Petrophil—petitioned to the Energy Regulatory Board an average of 90 centavos per liter of oil products. They claimed that they have unrecovered costs from 1983 to 1986 and additional costs during the first quarter of 1987. Why did the Aquino government give in to the petition for a new oil price increase in spite of the continuing probability of the oil companies? It is because with such an increase, the government can raise its tax collection. The paper suggests options for the government instead of persisting to retain the OPSF. PNOC can be utilized to serve as stabilizer of local oil prices instead of the OPSF.