What It Means
- The oil deregulation law is facing its loudest repeal push in years, with Senate President Sotto filing SB 1984 and multiple House bills targeting RA 8479, the 28 year old law that stripped government control over fuel pricing.
- President Marcos called the repeal “not off the table” but redirected focus to “immediate measures,” repeating a pattern where reform talk surfaces during price shocks and dies when they ease.
- The government now has excise tax suspension powers under RA 12316 and is studying VAT removal, but neither instrument touches the core pricing mechanism that the oil deregulation law protects.
- Senator Gatchalian’s push for price unbundling and a windfall tax targets the transparency gap that allows oil companies to shield procurement costs and profit margins from government scrutiny.
- Operators should watch the mid April DBCC recommendation on excise tax implementation and the Senate VAT bill timeline, but should not expect the oil deregulation law itself to be touched this session.
Republic Act 8479, the Downstream Oil Industry Deregulation Act of 1998, is once again the subject of legislative repeal proposals. Senate President Vicente Sotto III filed SB 1984 on March 25. The Makabayan bloc has filed parallel bills in the House. The Duterte brothers filed their own version months earlier. President Marcos, asked about the proposals on March 27, said the repeal of the oil deregulation law is “not off the table” but that the government is focused on what it can do “immediately.”
That statement is not new. It is not even new this crisis. And the pattern it fits into is worth more attention than the statement itself.
Every Oil Shock Produces the Same Cycle
The oil deregulation law has survived every fuel price crisis since 1998. The pattern runs the same way each time. Prices spike. Public pressure builds. Lawmakers file repeal bills. The executive acknowledges the proposals. And then the conversation shifts to incremental instruments: tax relief, subsidies, cash aid, voluntary staggered hikes. By the time those instruments are in place, prices have either stabilized or public attention has moved. The repeal bills die in committee.
This happened in 2008 during the global oil shock. It happened in 2018 when the TRAIN law excise taxes compounded pump prices. It happened in 2022 during the Russia Ukraine disruption. And it is happening now, in March 2026, with the Middle East crisis driving the most severe fuel price surge the country has recorded.
Each cycle adds a few more bills to the legislative record and a few more soundbites about reform. None of them have produced a committee report, a floor vote, or a reconciled version. The oil deregulation law survives not because the arguments for it are strong, but because the political cost of repealing it is always higher than the political cost of doing nothing until prices ease.
The Structural Incentive to Preserve Deregulation
There are real reasons the government resists full repeal, and they are not all bad faith.
Before RA 8479, the Oil Price Stabilization Fund (OPSF) absorbed the difference between global oil prices and domestic pump prices. When the fund ran dry, the government covered the deficit. That system shielded consumers from volatility but made the state the shock absorber of last resort. It also discouraged new entrants, limited competition, and created a pricing process so slow that oil companies faced chronic lags in recouping costs.
The oil deregulation law transferred that shock absorption to the market. Oil companies set prices based on the Mean of Platts Singapore (MOPS), a global benchmark. The government stepped back to a monitoring role. New players entered. The old three company cartel faced competition, at least in theory.
The problem is that the market the oil deregulation law assumed would exist never fully materialized. The Philippines still imports roughly 98 percent of its crude supply. It has one domestic refinery. And the “competitive market” the law was supposed to create has, according to the Makabayan bloc and multiple independent analysts, consolidated into coordinated pricing behavior among a small number of dominant firms.
The government resists repeal for a simpler reason: it does not want to be the shock absorber again. Returning to a regulated pricing system means the state either subsidizes fuel through a revived OPSF, imposes price caps that force oil companies to eat losses, or builds an entirely new regulatory architecture from scratch. All of those options cost money, capacity, or political capital that the current administration is not willing to spend while a crisis is ongoing.
The Government Has New Tools. None of Them Touch the Core Problem.
In the past month alone, Congress and the executive have built three separate instruments around the oil deregulation law without touching the law itself.
RA 12316, signed March 25, grants the President emergency power to suspend or reduce excise taxes on petroleum products when Dubai crude hits or exceeds $80 per barrel for one month. That power is now law, but the DBCC will not issue a recommendation to the President until mid April. Full suspension would lower pump prices by ₱6 to ₱10 per liter. Year to date cumulative hikes on diesel alone have exceeded ₱57 per liter.
The Senate is studying VAT removal on fuel. Oil companies told the PROTECT committee they support it. Senator Bam Aquino is pushing a bill to give the President the same suspension or reduction authority over VAT that RA 12316 provides for excise taxes. But no bill has been filed with that specific mechanism yet. The 12 percent VAT layer on top of already inflated prices means the government earns more revenue as prices rise, a dynamic that Representative Toby Tiangco has publicly called a “moral issue.”
The DOE continues to enforce anti profiteering measures under Batas Pambansa 33, a 1979 law that penalizes hoarding, overpricing, and illegal trading of petroleum products. But BP 33’s overpricing provision was written for a regulated market where the government set prices. Under the oil deregulation law, there is no government authorized price to exceed. The DOE can act against premature or unauthorized hikes. It cannot act against the pricing mechanism itself.
All three instruments operate around the edges. The oil deregulation law sits at the center, untouched, defining the structural reality: oil companies set prices, the government monitors, and consumers absorb the full pass through of global volatility with no buffer. The government’s broader crisis response has followed the same pattern: targeted subsidies and fare adjustments that address symptoms without changing the underlying cost structure.
Gatchalian’s Transparency Play Is the Most Structurally Interesting Response
Senator Sherwin Gatchalian has broken from the repeal camp. He has publicly rejected calls to return the oil industry to full government control, citing the state’s historical inefficiency in running the oil business. But he is pushing two measures that attack the information asymmetry the oil deregulation law protects.
The first is price unbundling. Under the current system, the retail price of fuel is a single number. Procurement costs, freight, insurance, exchange rate exposure, taxes, and profit margins are all bundled together and shielded as corporate trade secrets. The DOE cannot see how much oil companies paid for their inventory. Gatchalian wants those components broken out the same way electricity bills show generation, transmission, and distribution charges separately. The demand for granular pricing data mirrors a broader pattern in the fuel crisis: when official information infrastructure falls short, other actors step in to fill the gap.
The second is a windfall profit tax. Gatchalian has pointed out that oil companies typically hold 15 to 30 days of inventory. When global prices spike, they sell old stock purchased at lower prices at the new, higher price. The difference is windfall profit. Senator Rodante Marcoleta estimated during a PROTECT hearing that oil firms could be earning as much as ₱3 billion daily through this practice. Gatchalian called the estimate plausible.
The profiteering question cannot be answered under the current system. The oil deregulation law does not require oil companies to disclose procurement costs. The DOE’s monitoring authority does not extend to margin analysis. RA 12316 includes a new provision requiring oil companies to submit pricing component data to the DOE during excise tax suspension periods, but that requirement only activates when the suspension is in effect, and it has not been activated yet.
If Gatchalian’s proposals advance, they would not repeal the oil deregulation law. They would punch a hole in the information wall it protects. That may be more consequential than repeal itself, because it would make visible something the current system is designed to keep hidden: the actual profit margins of oil companies during a crisis.
The Repeal Bills Have No Legislative Runway
Sotto’s SB 1984 has no committee hearing scheduled. The House repeal bills have no consolidated version. Congress is about to break for Holy Week. Even Marcos acknowledged that amending the oil deregulation law requires “thorough discussions” and that he does not know when those will conclude.
The legislative calendar works against repeal. The 2025 to 2028 congressional term has competing priorities. The impeachment proceedings against Vice President Sara Duterte dominate House floor time. The Senate’s PROTECT committee is focused on crisis response instruments, not structural reform of the oil industry. And the executive branch has signaled, repeatedly, that it prefers incremental emergency tools over foundational changes to the deregulation architecture.
The oil deregulation law will survive this crisis the same way it survived every other one. The question is whether any of the transparency and accountability mechanisms being proposed will survive alongside it.
What Operators Should Track
The mid April DBCC recommendation will determine whether the excise tax suspension takes effect and at what level. If the suspension is partial rather than full, the relief will be smaller than the ₱6 to ₱10 per liter that full suspension would provide.
The Senate VAT bill is the next instrument to watch. If Aquino files a mechanism mirroring RA 12316’s structure for VAT, and if oil companies continue to support removal, the political path is clearer than repeal.
The unbundling and windfall tax proposals have the longest timeline but the highest structural impact. If the government gains visibility into oil company margins, the policy conversation changes permanently, regardless of whether the oil deregulation law stays or goes.
For MSMEs, transport operators, and anyone running a supply chain priced in diesel, the immediate reality is unchanged. The oil deregulation law means fuel costs are set by global benchmarks and corporate pricing decisions, with no government price authority and no buffer mechanism. Every crisis instrument being built right now operates at the margins. The core exposure remains.
Stay ahead of the cost structures, capital flows, and market recalibrations that shape Philippine business in Business & Money section of Hemos PH.
