Oil Deregulation Law Essay Sample
Fifteen old ages have passed since the passage of Republic Act 8479. otherwise known as “Downstream Oil Industry Deregulation Act of 1998” . but down to this twenty-four hours. Oil Deregulation Law remains to be a topic of differences. The rising tenseness is non merely based on whether or non we should modulate or deregulate oil industry but is besides founded on an of import economic inquiry: Should the authorities intervene in puting oil monetary values or should they go forth the market result to market participants – manufacturers and consumers? Before make up one’s minding on which side of the ring we will back up. it is necessary to see the undermentioned inquiries: What does it intend to modulate and deregulate oil industry? Who benefits or who suffers under a regulated and deregulated environment? Will ordinance or deregulating be a approval or a expletive? Chew overing over the replies to these inquiries will help us in taking whether we are for or against Oil Deregulation Law.
Harmonizing to Bernales ( 2010 ) . “deregulation is the lifting of certain authorities controls ( such as monetary value control ) on several facets of a specific industry. specifically the oil industry” . Oil deregulating. therefore. means that there is nil that the authorities can make to interfere with pricing and operation of oil companies except policy devising. On the other manus. under a regulated environment. authorities establishes Oil Price Stabilization Fund ( OPSF ) which pays for the difference in monetary value set by authorities and monetary value of oil in the planetary market.
Those who oppose R. A. 8479 claim that deregulating will ensue to maltreatments from oil companies whilst advocators of Oil Deregulation Law argue that it must be retained chiefly because it encourages competition and protects authorities from exposure of monetary value alterations. The information gathered by Ibon Foundation. an independent think-tank. shows that open uping oil companies. Shell. Caltex. and Petron has earned tremendous net incomes in 2007 entirely amounting to Php4. 12 billion. Php 2. 75 billion. and Php 5. 95 billion and since 2000. oil monetary values are overpriced by every bit much as Php 4. 55 per litre because monetary values are left unregulated. Oil Deregulation Law hence gives oil companies opportunity to pull strings or even abuse pump monetary values prejudicing consumers.
On the other manus. protagonists of R. A. 8479 is against the abrogation of the said jurisprudence because they have witnessed the benefits brought away by seting Oil Deregulation Law in topographic point. “From three participants – Caltex. Shell. and Petron. there are presently more than 80 new participants. These new participants. harmonizing to Department of Energy. have invested more than Php 28. 35 billion as of 2005” . Bernales said. Deregulating oil monetary values. hence. strains competition. Another approval experienced under a deregulated environment is protection from unusual fluctuations. If ordinance of oil monetary value is allowed. the authorities will hold to bear disagreement if the monetary value set in the planetary oil market is higher than the monetary value fixed by the authorities. If oil ordinance is still in pattern. OPSF would hold to fund at least Php 8. 3 billion in 1998.
With all the pieces of information gathered. it is imperative to utilize cost-benefit analysis as a tool to understand whether Oil Deregulation Law is favourable or unfavourable. Many believe that oil companies took advantage of the policy. boosting oil monetary values. but even in a regulated environment. oil monetary values will go on to lift. Let’s say. oil companies are given a grade of infinite to pull strings oil monetary values but that is JUST ONE out of several grounds that can be attributed for addition in the monetary value of oil. Will non oil monetary values increase if oil-producing states refuse to bring forth more supply of oil? Will non oil addition due to endure. peso-dollar exchange rate. planetary fiscal status. and any other factors? Logically. oil companies can’t maneuver oil monetary values merely to function their involvements. Why? Because the competition is in full swing. If they will mistreat and put monetary values to derive unjust advantage. they will ache no one except themselves because consumers will surely look for other options.
What about the benefits realized during the execution of the policy? A figure of participants have volitionally invested their money. Taxes. of class. would be collected from these participants by the authorities and these collected revenue enhancements will be used to fund meaningful undertakings – edifice schools. roads. set uping national defence. etc. Oil deregulating. so. promotes national development In line with that. the informations collected by Ibon estimations that OPSF would hold to blast out Php 8. 3 billion in 1998 to pay for fluctuation in oil monetary values had we pursued a regulated environment. What can we make with that immense sum? Possibly. under a regulated environment. people tend to experience secure because authorities allots resources to subsidise monetary values. Yet. the consequence is merely unreal. Why? Although the force per unit area is non felt by the population. government’s limited resources are spent non where it is needed but to pay for the difference between the unreal monetary value set in the national scene and the right monetary value in the planetary market. Weigh the cost and benefit and select for yourself. Will you side with ordinance of oil monetary values or will you be for deregulating of oil monetary values?
