MANILA - President Arroyo has officially lifted the price freeze on petroleum products, allowing oil companies to set their prices at current levels.

Mrs. Arroyo signed on Sunday Executive Order 845, which removed the oil price cap in selected areas of Luzon as recommended by the task force formed by the Energy and Justice departments.

This scrapped EO 839, which mandated oil companies to bring down fuel prices to October 15 levels in the aftermath of recent typhoons.

"The Department of Energy and Department of Justice and their joint task force are hereby directed to implement the package of proposals submitted by the oil industry players consistent with their respective rules and regulations," President Arroyo said in the order.

Oil companies have promised to offer discounts of up to P2 on fuel products in typhoon-stricken areas as well as extend social assistance to typhoon victims.

Big foreign and local business groups earlier demanded for the termination of EO 839, saying the directive would adversely affect the country’s oil supply.

Some gasoline stations in the provinces resorted to rationing to customers as supply ran short allegedly due to the government-imposed price freeze. Other stations complained of low fuel inventories and untimely deliveries.