MANILA, Philippines—The Big 3 oil firms have found an ally in the dean of the School of Economics of the University of Asia and the Pacific (UA&P) who told a Manila court Tuesday that the oil prices and the profit of oil firms were reasonable and that there was no proof of cartelization.

Peter Lee U testified in favor of the oil firms on a motion for the issuance of a temporary restraining order and writ of preliminary injunction on the oil prices increases.

U reaffirmed the results of the study made in 2005 to 2007 on the local oil firms’ pricing structures, which the UA&P jointly conducted with SGV & Co.

“I believe that the profit of oil firms were reasonable, therefore the oil prices were also reasonable. The study shows that international costs have increased more than local pump prices,” he said during the hearing at the Manila Regional Trial Court Branch 26.

“With his (U) testimony, we were able to prove that there was no overpricing,” said Petron Corp.’s legal counsel Gener Asuncion, who added that U was the lead economist in the study that was submitted to the joint task force of the departments of energy and justice and cited by the Supreme Court in the case involving oil deregulation.

To further prove his point, U cited the 2008 financial report of Petron.

Losing money

“It’s likely that there was no overpricing because they’re making losses. If there’s overpricing, then they should be making money,” he said.

U likewise told the court that similar prices in products are not sufficient proof of cartelization.

“Most charges of cartelization are proven not on economic data. Cartelization usually is proven, if, for example, there is a disgruntled executive who was fired from a company and decided to squeal to authorities that there was a group of people who regularly meet and discuss about the prices of their products … But similar prices alone would not be sufficient evidence, I think,” he said.

U said that he did not agree with the pronouncements of former National Economic and Development Authority Director General Ralph Recto that petroleum products were overpriced by as much as P8.

“On the basis of the analysis shown on the slides available on the NEDA website which I downloaded, I thought his (Recto) claim was premature and inconclusive,” he said.