<p>The ordinary Filipino driver recently faced a minor dilemma: Where to gas up? Before, there were only three choices, namely, Petron, Shell and Caltex. Now, new companies like Flying V and Seaoil surfaced in the gasoline arena, each providing attractive incentives for motorists to patronize their products—cheaper petroleum prices, better services and free car washes.</p>
<p>The entry of these companies can be credited to the deregulation of the oil industry. Due to Republic Act 8479 entitled “Downstream Oil Industry Deregulation Act of 1998” approved on February 10, 1998, the Philippine government effectively reduced its control on oil-related pricing activity and trade restrictions.</p>
<p>After deregulation took effect, prices of petroleum products still continued to rise, prompting many consumers to complain and associate such increases with deregulation.</p>
<p>But the price increases were not a direct effect of deregulation. The country has been experiencing oil price increases even before deregulation took effect. The reason: we are a net importer of petroleum. Thus, when prices of petroleum products abroad increase, the local oil industry has little choice but to adopt the rise in prices. The bottom line is increasing oil prices are due to the increases in the world price of oil compounded by the depreciating value of the peso.</p>