MANILA - Malacañang had said the cap on fuel prices will stay for as long as Luzon remains under a state of calamity to shield storm victims from oil price increases.

But a former socio economic planning secretary said on Sunday that the oil price freeze will actually do more harm than good.

Former National Economic Development Authority chief Cayetano Paderanga Jr. said Executive Order 839’s negative effects far outweigh its advantages.

Aside from a supply shortage that could lead to rationing and an expected surge in oil prices once EO 839 is lifted, Paderanga said the price cap is sending a negative message to investors.

“Investors there would start thinking that their ability to recoup costs and of course planned profits because nobody goes into business without any expectations of returns… will now be severely curtailed. . I think this is a difficult long run effect that probably the government had not anticipated,” said Paderanga

Paderanga said he believes government should instead look for solutions that would yield long term benefits.

“I think the medium and long-run policy should be to try see how the Philippines can go into alternative and real sources so that we can be less dependent on oil,” said Paderanga.
MANILA - Malacañang had said the cap on fuel prices will stay for as long as Luzon remains under a state of calamity to shield storm victims from oil price increases.

But a former socio economic planning secretary said the oil price freeze will actually do more harm than good.

Former National Economic Development Authority chief Cayetano Paderanga Jr. said Executive Order 839’s negative effects far outweigh its advantages.

Aside from a supply shortage that could lead to rationing and an expected surge in oil prices once EO 839 is lifted, Paderanga said the price cap is sending a negative message to investors.

“Investors there would start thinking that their ability to recoup costs and of course planned profits because nobody goes into business without any expectations of returns… will now be severely curtailed. . I think this is a difficult long run effect that probably the government had not anticipated,” said Paderanga

Paderanga said he believes government should instead look for solutions that would yield long term benefits.

“I think the medium and long-run policy should be to try see how the Philippines can go into alternative and real sources so that we can be less dependent on oil,” said Paderanga.

Energy department officials are set to meet with oil players on Monday but did not say if EO 839 would be discussed.

For now the oil price freeze stays until the state of calamity is lifted over Luzon.

Meanwhile oil giant Petron Corp. said on Sunday it is willing to open its books to the justice and energy departments to prove it is not overpricing fuel products.

Petron is expecting a loss of about P1.5 billion because of EO 839 which temporarily froze oil prices at October 15 levels.

The freeze was implemented to help Luzon cope with the devastation caused by typhoons Pepeng and Ondoy. Jenny Reyes, ABS-CBN News