Gov’t should apply temperature compensation on oil products

In the June 13, 2023 issue of the Philippine Daily Inquirer, it was reported that National Power Corp. (Napocor) is losing P1 billion per month because of the volatility of diesel prices (“Napocor losing P1B a month, says chief,” Business). Diesel is used by Napocor’s small power utilities group to supply electricity to areas not connected to the national electricity grid.

I have written two letters on how the government can reduce what consumers pay for oil products, diesel included, through the method called temperature compensation (TC) which is what is being done in many countries abroad. My two letters appeared in the Opinion section (“Government can try ‘temperature compensation’ to address rising oil prices,” 6/14/22, and “Try temperature compensation to address rising oil prices,” 2/2/23).

As the name implies, TC is done to compensate consumers for the unwarranted effects of temperature on the quality and quantity of oil effects. Oil products are sensitive to temperature changes. When the temperature rises, the volume of the oil increases, and when the temperature falls, the volume of the oil decreases. However, it does not mean that when the volume increases, the mileage or the energy you get from the oil also increases. The optimum temperature is 15 degrees Celsius so consumers should only pay for the volume measured at 15 degrees, not the actual volume at the observed temperature. In my letters, I indicated how much savings consumers can get if TC is implemented in our country.

With TC, even when the price of oil goes down to only say P1/liter, consumers will continue to save, because TC is applied on the volume and not on the price. When the price of oil becomes very affordable to consumers, the government can have the option to have the savings go to a special fund to be used to develop alternative sources of energy or to a special fund for fuel subsidy in case the price of oil goes up again.

I have given copies of my two letters to the Senate (Sen. Juan Miguel Zubiri and a number of other senators) and to the Department of Energy (DOE) on April 23, 2023. The senators acknowledged receipt of the letters through their auto-reply but the DOE did not even acknowledge it.

The DOE should be doing something about oil prices, but we have not heard anything from them. It is true we have no control over oil prices but we have control over the volume we should be paying through TC.

Hoy gising DOE!

Ernesto M. Adaya,

[email protected]