Case Study: Oil Price Rollback

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The Department of Energy (DOE) and Department of Trade Industry (DTI) had a recent investigation regarding the oil price in our market. They found out that the oil price is in need to be lowered in accordance in the changes in the International Market of Oil. The investigation shows that the price of oil is higher than it should be. The BIG 3 key players in our oil industry namely, Petron, Shell and Caltex as a response to the recent investigation lowers the oil price by .50cents per liter. The oil companies lowered their oil price but not as recommended by DOE and DTI because according to oil companies, they foresee a chance of shortage in oil supply.


Philippines is dependent on foreign oil market thus the rising market prices and growing national debt price regulation by the government has been increasingly difficult which results a need for Oil Deregulation Law. Oil Deregulation Law is implemented in Ramos regime when the crude oil price rapidly increased and the Oil Stabilization Fund failed. Oil Price Stabilization Fund, which had been originally established by President Ferdinand Marcos for purpose of minimizing frequent price changes brought about by exchange adjustments and/or an increase in world market prices of crude oil and imported petroleum products. Under a regulated environment, the government has to subsidize to cope with the price increase and decrease of oil. Thus, the mismanagement of funds in the OPSF created the need for deregulation. According to Republic Act No. 8479 also known as Downstream Oil Industry Deregulation Act of 1998 states to liberalize and deregulate the downstream oil industry in order to ensure a truly competitive market under a regime of fair prices, adequate and continuous supply of environmentally-clean and high-quality petroleum products. This means that the government should not interfere with the pricing,...
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