The government and the public should not be alarmed by “horror tales” about a fuel shortage in the wake of the freeze of pump prices in Luzon, an industry insider said.

“Don’t be afraid of the ‘oil shortage.’ The major oil companies have yearly supply contract terms with producers. They cannot stop importing fuel,” said the industry insider who spoke on the condition of anonymity.

“They have resorted to blackmailing the government by saying they will stop importing and create a fear of shortage,” said the oil expert.

“Obviously, the shortage scenario was merely floated in order to force the government into revoking the prevailing price ceiling on fuel prices,” the insider said.

Last October 23, President Gloria Macapagal Arroyo issued Executive Order (EO) 839 directing the country’s oil firms to revert to their October 15 price levels and “freeze” it there until the State of Calamity is lifted over Luzon.

Malacañang said the EO was to ensure that no unreasonable price hikes on fuel would be made while cities and provinces in Luzon try to recover from the devastation of recent typhoons.

Most oil companies have heeded the directive by October 27, but not without threatening to cut back or even ration their fuel supply because they allegedly could no longer afford ever-climbing world market prices.

But the oil insider said these firms cannot just stop getting oil from their suppliers, simply because they have a contract to honor.

“They will be automatically supplied because it’s part of the agreement of both parties,” the source said. “Oil firms cannot hold their products or reject their orders because it’s part of the memorandum of agreement.”

All three major players — which control over 80 percent of the local oil industry – have ongoing contracts, the insider.