How are oil prices computed? The truth is that nobody really knows.
Previous pronouncements of the Department of Energy (DOE) reveals that the agency can only provide the public with a projection based on international market. The energy department cannot and do not know how oil prices are computed, particularly the landed cost.
In last week of March 2025, the first 4 trading days in the Mean of Platts Singapore (MOPS), gasoline is up by ₱0.94 per liter while diesel is more expensive by ₱0.75 per liter. Kerosene is also up by ₱0.93 per liter. However, oil companies in the Philippines announced that they will increase the local price of gasoline by ₱1.40, and diesel and kerosene by ₱1.20 effective 1 April 2025.
Why is the local price hike higher than the global market? Are there still diesel and kerosene in oil storage? Whatever happened to the oil, diesel, and kerosene long bought and stored in the country even before the increased prices in the global market?
This is what Bayan Muna has been trying to unbundle.
What is unbundling?
Unbundling refers to the breaking down of the costs of goods and services. This is done to provide price transparency to the public. This, too, helps in detecting, investigating, and uncovering any attempts to overprice and other unfair price practices.
One example of what unbundling looks like is the monthly electricity and water bills. Consumers can now see the charges, including generation, transmission, distribution, taxes, and other charges. If such can be done for electricity and water consumption, Bayan Muna believes such can be replicated for petroleum products.
In September 2016, Bayan Muna Rep. Carlos Zarate filed House Resolution No. 415 to investigate the alleged predatory pricing of oil products in Mindanao.
Predatory pricing is an unfair and anti-competitive practice, wherein monopolies or huge companies artificially and unrealistically lower the prices of their goods and/or services in the short term to drive out competitors and deter new entrants and later increase the price to recoup their losses. During the hearing of the Resolution, the oil companies refused to be transparent by presenting their unbundled prices and their formula for computing their prices.
Due to Bayan Muna’s demands, the DOE was later compelled to issue Department Circular 2019-05-008, or the Revised Guidelines for the Monitoring of Prices in the Sale of Petroleum Products by the Downstream Oil Industry in the Philippines. This Circular was signed on 28 May 2019. However, the oil companies immediately filed a petition to stop its implementation.
On 21 June 2019, the oil companies, through the Philippine Institute of Petroleum, Inc. (PIP), Isla LPG Corporation, PTT Philippines Corporation, and Total Philippines, challenged the Circular and alleged that it is ultra vires (beyond the powers) act of the DOE under Republic Act No. 8479 or the Downstream Oil Industry Deregulation Act of 1998. Months after, the Regional Trial Court Branch 58 of Makati City issued a temporary restraining order and then a writ of preliminary injunction to stop the DOE from implementing the Circular in favor of the oil companies.
This prompted Bayan Muna to file House Resolution No. 9 in July 2019, to investigate the alleged predatory pricing and/or overpricing of oil products, and demand the unbundling of oil prices, and House Bill No. 10386, the Unbundling Oil Prices Bill, in October 2021.
Next step: Implement the DOE Circular
After relentless fights inside and outside of Congress, Bayan Muna scored a series of campaign victories. In 2022 and 2023, the Court of Appeals reversed the decision of the RTC Branch 58.
On July 31, 2024, the Supreme Court First Division finally affirmed the validity of the Circular.
“It sustained the argument of the DOE that there is no clear right to be violated by the implementation of DC2019-05-0008 as the same does not impose any price control nor dictate market prices to influence and regulate the oil industry. ,” the Supreme Court said in its decision.
However, a year later, the DOE has yet to implement it. This compelled Bayan Muna to call out the energy department on 31 March 2025. In a letter they filed a letter to Energy Secretary Raphael Lotilla, Bayan Muna said the DOE must push for the implementation of the Department Circular 2019-05-008 and demand from oil companies to unbundle their oil prices.
“There is nothing confidential about the actual cost of producing oil. We have to put a stop to this abuse of oil companies that have made life more difficult for the poor who have to pay more for fuel, for transport fare, and for LPG just because there is no transparency in the oil industry. This bill is most timely now in the time of crisis, that every centavo and peso count in the shrinking budget of consumers,” said Bayan Muna.