Gov’t stockpiling of cheap oil backed

MANILA — Amid low oil prices, the Liquefied Petroleum Gas Marketers’ Association (LPG-MA) supports the Department of Energy’s plan to stockpile ready-to-use fuel products and secure some of the country’s future requirements.

“Considering the historical volatility of global oil prices, it would make sense for government to take advantage of inexpensive oil and obtain at a bargain additional fuel supplies for use in extraordinary need,” said LPG-MA Rep. Arnel Ty, a senior member of the House energy committee.

He said the Association of Southeast Asian Nations Petroleum Security Agreement also encourages members to build extra stockpiles.

Due to a great global surplus, the price of oil has plunged 75 percent to around USD30 per barrel since the middle of 2014. A number of commodity analysts see the price of oil falling to as low as USD18 per barrel, before recovering to USD60.

Energy Secretary Zenaida Monsada has directed the state-owned Philippine National Oil Co. (PNOC) to study the feasibility of petroleum stockpiling, including the proposed volume and type of fuel.

The stockpiling plan earlier drew the support of Eastern Petroleum Corp. president Fernando Martinez.

“We are leaving it up to Secretary Monsada and the PNOC to ascertain the best way to build the reserves. Nowadays, future supplies at a pre-determined price can be acquired on paper, without necessarily taking immediate physical delivery of the commodity,” Ty, a deputy minority leader, said.

In any future crisis, Ty said ready access to supplemental fuel supplies that can be easily released into the market may be enough to protect consumers and deter potential pricing abuses.

Under Presidential Decree 334, the lawmaker said the PNOC is duty-bound “to provide and maintain an adequate and stable supply of oil and refined fuel products for the domestic requirement.”

He said the Philippine government actually started resorting to fuel reserves in 2011, when oil prices soared to USD120 per barrel at the height of the Arab Spring and the rebellion against Libyan dictator Muammar Gaddafi.

In April that year, President Aquino ordered the PNOC to procure a shipment of 50 million liters of diesel, then worth some Php2.3 billion, for emergency use. The supplies were hoarded in two tank farms leased by a PNOC subsidiary.

Also that year, fears of potential supply disruptions prompted the Philippine government to obtain assurances from its oil-producing neighbor, Indonesia, for additional provisions should the need arise. Sammy Martin/PNA/