The black gold empire has struck with merciless retaliation in a face-off with Malacañang over Executive Order No. 839 that puts a lid on spiraling prices of petroleum products, which are critical to the rehabilitation of areas in Luzon devastated by storms.

There is little sign which side will blink first while the public is being squeezed in a standoff that has resulted in fuel supply at gas stations beginning to run low.

In retaliation for the imposition of EO 839, an emergency measure that followed the declaration by President Gloria Macapagal-Arroyo of a state of calamity in Luzon, a number of retail pumping stations started at the weekend to cut service hours.

Blaming the Palace for the reduced supply, oil companies claimed that that they found it difficult to meet demand “since you are being directed to sell your products at a loss.”

Populist decision

Ms Arroyo, in a populist decision intended to defuse public unrest over oil price increases, decreed on Oct. 23 the rollback of fuel prices to their Oct. 15 levels.

The claim of oil companies that they were incurring losses is highly contentious and hard to verify because they have refused government auditors access to their books.

Some oil companies, including Petron Corp. and Pilipinas Shell Petroleum Corp., said they were operating normally but were feeling the pressure of supply shortage.

Restricting supply

The oil companies noted a sudden increase in demand for their products, especially when other players temporarily stopped operations as they waited for the next batch of deliveries. This suggested that the oil companies were restricting supply.

Aside from these methods intended to send the administration to its knees, they appealed to the President to have a dialogue with them for the lifting of the price cap.

The oil firms opened a new front against Malacañang on Friday. They filed an urgent petition with the Makati Regional Trial Court for the lifting of EO 839. The court action followed a brusque refusal by Ms Arroyo to meet with the oil company executives.

Executives of oil firms and related businesses also signed a petition published in full-page advertisements that was couched in insulting language that could only have offended the President, who has used the conflict to play the public interest card and to turn pubic anger to the oil companies.

Insulting

The ad’s insulting passage read: “We know that everyone wants low prices and this is a popular move for now. But you have always said that your objective is not to be popular but to do what is good or right for the country.”

Malacañang not only rejected the petition but also said that the order was only for the duration of the state of calamity. It dangled the offer that the order may be lifted in certain areas.

The presidential spokesperson said Ms Arroyo was open to a dialogue, but the oil firms were disdainfully referred to a task force formed to receive such petitions.

In its court petition, Shell said Ms Arroyo unilaterally determined the existence of exceptional circumstances warranting the direction of the oil firms—a move that the firm claimed was in contravention of the Constitution.

International reputation

Shell raised serious concerns about the grave and irreparable injury that EO 839 could inflict not only on business and the larger economy but also on the international reputation of the Philippines.

Shell warned that the executive order may logically result in shortages, rationing of petroleum products and the development of a black market for oil products in the country.

Malacañang remained unfazed by the threats, insisting that the oil price freeze would continue unless stopped by the courts.

The administration said it was not cowed by the effort to browbeat it through the newspaper advertisement and the courts.

Counterproductive

The threats have counterproductive effects in relation to the administration’s reaction. They forced the Palace and handed it a populist issue in which it can turn public anger to the oil companies.

The administration said: “Malacañang is standing by what is for the good of the greatest number of our people. These oil companies should listen to the sentiments of the people.”