The Department of Energy on Thursday proposed imposing a hefty fine of up to P500,000 and two years imprisonment on oil trading hoarders, who illicitly stockpile petroleum products during times of energy crisis. 

DOE Secretary Sharon Garin made the pitch as the Senate committee on energy resumed reviewing possible amendments to the Oil Deregulation Law (RA 8479) as tensions arising from the United States-Israel war on Iran remain volatile. 

Because the law does not explicitly give the DOE regulatory powers to crack down on price and supply manipulators, Garin said they have to tap other agencies to enforce possible arrest through other laws, such as the Price Act (RA 7581), which imposes fines and imprisonment for hoarders and profiteers. 

The months-long US-Israel war on Iran, which has triggered global supply disruption, causing prices to skyrocket, exposed the loopholes of the nearly three-decade-old law, according to Garin. 

“The crisis that we underwent in the last 100 days has actually emphasized what we need to amend in the Oil Deregulation Law, like the lack of regulatory powers of DOE over the industry, because it’s basically a liberalized, market-driven industry, even in prices and stocking, and even in inventory levels, there's a limitation there,” Garin told senators. 

The Philippines is prone to oil price shocks and supply disruptions because it imports about 98 percent of its oil from the Middle East,  making it severely affected by the US-Israel war on Iran.

The law liberalized the downstream oil industry and removed government control over the pricing, importation, and export of petroleum products, promoting free competition.

It effectively stripped the DOE of the power to intervene in oil firms and prevent abrupt changes in pump costs, unless the President declared a national energy emergency. 

Another downside of the law, Garin stressed, is the absence of anti-hoarding measures under the DOE’s regulatory framework, limiting its ability to address malpractices. 

“That’s why when we issued [a] show cause order, we had to use other laws, Mr. Chair… We have to go through the PNP, DTI, and DOJ. We invoked whatever anti-hoarding laws were applicable. But under the Oil Deregulation Law, it is not explicitly stated,” the DOE chief explained. 

Under the DOE’s proposal, the fines for traders found to be illicitly hoarding petroluem products to make artifcial shortage, and cause spike in prices should be punishable by to P250,00 to P500,000 and imprisonment of six months to two years.

If the offender is a consumer, fines will range from P10,000 to P100,000 and jail time of up to six months. 

The stringent penalty will be imposed on oil companies non-compliant with the minimum inventory requirement (MRI).

Petroleum firms are required to maintain a specific volume of in-country reserves to guarantee supply. The DOE closely monitors this stock to prevent shortages amid global market shocks.

Panel chair Erwin Tulfo agreed that it is high time to revisit the “outdated” law to reflect the current situation and ensure that “questionable pricing practices will not happen again.” 

Phl first petroleum reserve possible by 2028

Garin shared with senators that the DOE is currently in talks with officials from the United Arab Emirates and Japan regarding the Philippines’ plan to establish a national oil reserve and a strategic oil reserve.

A whopping P5 billion is needed to shell out to build a reserve for 1 million barrels alone, with the construction could take about a year. 

The Cabinet official confirmed that they intend to finish the construction in the last quarter of 2027 if not first quarter of 2028, before President Marcos Jr. leaves office.

Finance committee chairperson Senator JV Ejercito strongly backed the DOE’s plan to build the country’s first petroleum reserve, and vowed to prioritize it in the upcoming deliberations for the 2027 national budget in a bid to insulate the country from the severe impacts of global oil shocks.

In the same vein, Senate President Win Gatchalian emphasized that the ongoing US-Israel war on Iran highlights the importance of the Philippines veering away from being heavily dependent on oil imports and establishing its own reserves.

“So, if war breaks out in the Middle East, we are immediately hit in terms of supply and prices. We need to look at how we can break free from what I call our addiction to Middle East oil. One way to do this is by rapidly [shifting]to electric vehicles, and there is already an existing law for that,” Gatchalian told the panel.

While petroleum prices hit several rollbacks in recent weeks, senators argued that the country is still vulnerable to global market shocks, especially with tensions remaining volatile in the Strait of Hormuz—through which about 20 percent of the world’s oil and liquefied natural gas transits.