Forced to comply with a Malacañang Executive Order (EO) freezing the prices of petroleum products while a state of calamity is in effect, all of the country’s oil firms rolled back their pump prices Tuesday.

Major oil firms Petron Corporation, Pilipinas Shell Petroleum Corporation (PSPC) and Chevron Philippines successively announced their price reductions starting at midnight on October 27.

Flying V and Seaoil earlier reduced prices within their respective retail networks.

Despite the grudging compliance, the oil companies indicated their reservations as to the implications of freezing prices.

“Without prejudice to seeking legal remedies, PSPC will comply with the directive of Executive Order No. 839 for oil industry players to maintain prices of petroleum products prevailing on 15th October 2009,” noted Shell vice president Roberto S. Kanapi.

Petron and Chevron (which carries the Caltex brand) echoed the same sentiment, noting that as good corporate citizens, they will comply with the EO but without necessarily giving up prudent assessment of how the policy will eventually impact the industry.

EO 389, which was issued by Malacanang on October 23, specifically directs that oil prices must be brought down to October 15 price levels. This meant price reduction of P2.00 per liter for diesel; P1.50 per liter for kerosene; P1.25 per liter for premium and unleaded gasoline; and P0.85 per liter for regular gasoline.

Additionally, Phoenix Petroleum indicated in its price reduction advisory that, “with legal reservation and in spite of continued losses,” it had to follow the price reduction mandate.

Meanwhile, Shell stressed that it will continuously seek clarification with the Department of Energy (DOE), chiefly on unclear points of the Executive Order, such as “the products affected, the period of effectivity, the definition of pricing levels i.e. suggested retail price (SRP) versus actual retail price (ARP), and the geographical coverage of the Executive Order since not all areas in Luzon were affected by typhoons Ondoy and Pepeng.”

The company further pointed out that “in view of the resulting lower and fixed prices at retail stations compared to the wholesale prices for commercial and retail accounts, PSPC expects a potentially significant shift of purchases by commercial and industrial accounts from being directly supplied by the oil companies to buying from retail sites.”

The company added that to manage “potential volume shift, which cannot be served by its retail sites, PSPC will allocate fuel supplies to its retail stations in Luzon based on their average sales in recent months effective immediately.”

Many industry players also raised the possibility of proliferation of smuggled oil products in the market as a result of the EO since it is the only way for unscrupulous industry players to survive in a market wherein products had to be sold at a loss.

Like what the rest of the industry has been anticipating as “worst case scenario”, Shell also cautioned against potential supply disruptions and a negative impact on the investment climate in the country.

“While the intent of the Executive Order is to prevent unreasonable increase in prices of petroleum products during a state of calamity, the consequences of the Executive Order would be supply disruptions and negative impact on the investment climate in our country. We will continue to discuss these issues with the DOE-DOJ Task Force and other relevant government agencies,” Kanapi stressed.

For its part, Unioil went against the industry tide, assuring that there will be no supply disruptions primarily for patrons it has been serving.

“We would like to assure the public that Unioil has enough supply of petroleum products in our inventory to comply with the President’s directive.

There will be no problem in the normal flow of petroleum products in all our retail stations,” Unioil general manager Chito Medina-Cue said.