MANILA, Philippines — Two days after Malacañang lifted the price caps on fuel, Pilipinas Shell Petroleum Corp., Petron Corp. and three small oil companies began raising their prices—diesel by P2 a liter, gasoline by P1.25 to P1.50 a liter and kerosene by P1.50 a liter.

The liquefied petroleum gas (LPG) of Pilipinas Shell and Petron will go up by P2 a kilogram.

Pilipinas Shell, Petron, Eastern Petroleum Corp. and Flying V Philippines Tuesday said the price increases would take effect at their gas stations at 12:01 a.m. Wednesday.

Phoenix Petroleum’s retail outlets will start charging the higher prices at 6 a.m. Wednesday.

Petron spokesperson Virginia Ruivivar said its price adjustments would only take effect in Luzon.

Chevron Philippines and other oil firms were mum about their own price increases as of press time.

Eastern Petroleum chair Fernando Martinez said the company had yet to determine when the second and third round of increase would be implemented.

“Ideally, the price increases should be implemented weekly, but it’s still up to the market forces, since we are in a deregulated market. If prices in the world market fall, for instance, then the increase (will be offset),” he said.

Oil industry executives earlier said that the amount they had to recover stood at P4 to P5 a liter because of Executive Order No. 839 that froze fuel prices at their Oct. 15 levels in Luzon, which was placed in a state of calamity because of the damage wrought by storms.

Discounts

On Monday, President Gloria Macapagal-Arroyo lifted the cap on fuel prices through EO 845 and directed a task force to implement proposals promised by oil firms, including discounts and staggered-price adjustments.

The oil firms and big business vehemently opposed the price freeze, warning that it would lead to a fuel shortage, cause the oil industry to incur huge losses and deter investments.

Energy Secretary Angelo T. Reyes himself announced that the country’s inventory of finished petroleum products were running low.

Over the past week, a number of gas stations have either shortened service hours or stopped selling, claiming that their supplies have been depleted.

Pilipinas Shell took legal action against EO 839, saying that the order ran counter to the Oil Deregulation Law.

Court ruling

Despite the lifting of EO 839, the Makati Regional Trial Court will still conduct a hearing for preliminary injunction on a case that Shell filed against the order.

In a decision signed on Nov. 13, three days before the order freezing fuel prices was lifted, Judge Winlove Dumayas sided with Shell.

Dumayas issued a temporary restraining order on the implementation of EO 839 and scheduled the injunction hearing for Nov. 23.

He said EO 839 was invalid.

Three installments

Martinez, who also chairs the Independent Philippine Petroleum Companies Association, earlier assured the public that the oil firms would not recoup their under-recoveries in one blow.

Recovery would likely be implemented in three installments as competitive forces would ultimately determine where fuel prices would go after the lifting of EO 839, Martinez said.

Prices up in other areas

Eastern Petroleum was the first to announce a price increase, although an industry source said that prices of petroleum products in several areas had already gone up.

The source said several gas stations on Shaw Boulevard in Mandaluyong City, Camarin in Caloocan City, Molino in Cavite, Mabalacat in Pampanga and Commonwealth Avenue in Quezon City, among others, have raised prices of diesel between P1.45 and P2 a liter.

This had brought prices of diesel in these areas to at least P30 a liter as smaller oil firms in the area had similarly hiked their prices, the source added.

Martinez said he expected Eastern Petroleum to return to normal operations within 20 days.

Dubai crude

As of Nov. 16, data from the Department of Energy showed that the regional benchmark Dubai crude had climbed to an average of $78 a barrel, from an average of $73 a barrel in October.

The price of unleaded gasoline based on the Mean of Platts Singapore (MOPS) benchmark for refined petroleum products likewise increased to an $81-a-barrel average as of Nov. 16, from last month’s average of $78 a barrel.

The MOPS-based diesel rose to an average price of $85 a barrel in the Nov. 1-16 period, from $80 a barrel last month.

Revisit Constitution

Judge Dumayas said that in coming up with the decision declaring EO 839 invalid, he considered the constitutional provision on Congress’ authority to grant the President special powers “for a limited time and subject to such restrictions” during times of war or national emergency.

“Applying the foregoing constitutional provision in the present case, it can be clearly inferred that EO 839 is invalid. The constitutionality of the Downstream Oil Industry Deregulation Act of 1998, from which the EO derives its force, calls for the revisiting of [Congress’ authority],” he said.

Because both EO 839 and the Oil Deregulation Law did not specify the time frame within which the special power granted to the President, or her alter ego, should end, “such emergency power may be exercised by them arbitrarily to the prejudice of the oil firms’ rights. It gives them discretionary authority to what circumstances such emergency power may be applicable,” Dumayas said.

The implementation of EO 839 could distort the law on supply and demand, causing one or the other to gravely suffer, he said.