Counterproductive

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AT a time when local oil firms have been slashing prices of fuel products for weeks, the Supreme Court decision removing the Pandacan oil depot comes at a bad time and would surely be counterproductive.

The Supreme Court last Tuesday ordered the relocation of the depot, which houses the oil storage facilities of major oil companies in the country.

The Department of Energy warned that prices of petroleum products may rise after oil firms shut down their facilities at the Pandacan oil depot to comply with the Supreme Court order.

The additional cost factor will come from oil companies having to get their supply of products directly from oil refineries in Bataan and Batangas.


According to the DoE, 50 to 70 percent of oil products in Luzon including the National Capital Region are coming from the oil depot in Pandacan.

The economic importance of this depot cannot be overstressed. The depot also supplies roughly 50 percent of the country’s total fuel demand and 100 percent of the transport and industrial sector’s lubricants. More than 1,800 retail stations in Regions 1 to 4 — of which about 500 are in Metro Manila — get their fuel supply from the facility.

The depot also serves 70 percent of the shipping industry’s fuel needs and 75 percent of the region’s aviation fuel requirements.

The DoE expects one to two days of lag time in the delivery of petroleum products as refineries are in Batangas and Bataan.

There would also have to be more trucks transporting oil, adding to the already horrendous traffic congestion, pollution and dangerous road conditions in the metropolis.

The additional fuel costs because of the oil depot closure would certainly take their toll on businesses that are already struggling to operate.

This would be counterproductive and would have tremendous potential to inflate the prices of consumer goods and services.

I don’t believe the Supreme Court decision wisely considered the collateral damage, the most important being its negative impact on the national price of fuel considering there are several knock on effects to both oil supply and demand distribution.

Also, it did not consider what would happen to the bulk oil barge transport industry and all the jobs depending on it?

Another thing it did not consider is what would happen to the 117-kilometer Batangas-to-Manila oil pipeline that used to supply the petroleum products to the Pandacan depot?

The Supreme Court last year had given the go signal for the resumption of operations of the white oil pipeline upon clearance from the Department of Energy.

But with no Pandacan depot, the pipeline would be useless as the oil flow will have nowhere to terminate. There is no space large enough to accommodate repositioning the oil depot anywhere along the route of the pipeline right of way.

The pipeline is of tremendous use to the country. Keeping the pipeline working keeps the refineries out in the countryside while the locus of fuel distribution in Pandacan is as close as possible to the country’s largest concentration of oil consumers.

The pipeline is also not affected by traffic and by weather disturbances like typhoons and floods. Just a few hours or even minutes of heavy rainfall nowadays can cause floods in Metro Manila which not only cause terrible traffic gridlocks but also disrupt fuel deliveries to gas stations.

Because the pipeline is closed (and has been closed since late 2010), the oil transport industry has had to hire 400 tanker truck trips a day to cover for the oil flow that the pipeline supplied.

Imagine how many more truck trips are needed after Pandacan depot is closed?

Again, what would that do to traffic and to fuel prices nationwide? Surely it would have an adverse impact on logistics and fuel costs which would trickle down to end consumers.

What would it do to air pollution levels? How much more dangerous would our roads be considering the number truck-related accidents that have already happened? Surely, it would increase the risk of road accidents, product spills and pilferage.

They said closing the Pandacan depot is for the safety of the residents in the area.

But the district in Pandacan has been an industrial zone for the past 90 years and the oil depot has been operating for that same time with no major incidents.

In fact, just in 2009, Representatives of Manila City Hall thoroughly inspected the oil depot and declared that it is safe and its operations are at par with international standards.

Besides, even with the depot’s closure, that land or area where it sits cannot be developed for commercial purposes by the City of Manila, simply because it is not theirs but belongs to the private sector.

Also, what signal do we send to investors and businesses if we keep changing ordinances, laws and policies?

The number one thing investors look for in a country is a stable and predictable political environment.

This is where the Philippine government often fails. Our flip-flop policies make for a very unstable regulatory environment, and this turns off a lot of investors. The Pandacan depot case is a classic example.

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1 Comment

  1. I can not agree more with your opinion sir. The economic impact of this decision by the supreme court would be disastrous. As for the safety concern, I was born and raised in Pandacan and I can remember one minor incident in the mid sixties wherein an oil spill happened that caused a couple of houses along the estero de Beata to burn down but the oil companies own fire crew quickly stopped it from spreading.
    I know the biggest concern is terrorism and that is why there is a certain time at night wherein vehicular traffic is prohibited along the Pandacan to Sta. Mesa bridge.
    I just hope and pray that the supreme court would reconsider ( if that is still possible).