Gasoline down P1.50, diesel P1.70; govt warned on stockpiling

Local oil companies are slashing prices of gasoline products by P1.50 a liter and of diesel and kerosene by P1.70 per liter, following government pressure and the steep drop in oil prices in the international market.

Petron Corp. and Chevron Philippines will implement the rollbacks effective today.

Other oil companies like Eastern Petroleu and  Flying V Philippines have made their respective fuel price adjustments as early as last Saturday.

Total Philippines and Phoenix Petroleum Philippines followed suit yesterday.

The decrease came amid a warning issued late last week by Energy Secretary Jose Rene D. Almendras to oil companies that they will be investigated unless they cut fuel prices by P2 a liter today.

The Cebuano energy secretary said the oil firms run the risk of an investigation by the Department of Justice if they fail to cut back on fuel prices.

Local transport groups have yet to issue their response to the fuel price rollback.

Easing the burden

Last March, Cebu transport groups petitioned the Land Transportation Franchising and Regulatory Board in Central Visayas (LTFRB-7) for a 50 centavo fare hike in lieu of a P9 increase to ease the burden on commuters.

Ryan Benjamin Yu, president of the Cebu Integrated Transport Cooperative (Citrasco) said the fare hike would be enough to sustain the operators.

A complaint filed by the Capitol against the Big Three oil firms in relation to the high fuel prices in the province remains pending at the DOJ.

Prior to this rollback, oil companies already slashed prices last Tuesday by P1 per liter for all gasoline products and 75 centavos a liter for diesel and kerosene.

As of August 5, the Dubai crude fell to $101 a barrel from $113 a barrel last August 1.

Prices of gasoline based on the Mean of Platts Singapore (MOPS) benchmark for petroleum products also fell to $118 a barrel as of August 5 from $129 a barrel on August 1.

MOPS-based diesel prices similarly decreased to $123 a barrel from $134 during the same period.

Global demand

As this developed, a Platts official urged the national government to drop plans to stockpile fuel products.

Jorge Montepeque, global director for pricing at Platts, explained that stockpiling would increase the global demand for oil, which would only cause prices to go up.

This will adversely affect a country like the Philippines, which imports a huge portion of its fuel requirements, particularly for transport.

“So if you create stockpiles, you will just harm yourself. Furthermore, the oil market now is free, so if there’s a shortage, the price will go up and you just decide whether or not you want to buy. There’s no need for anyone to have a stockpile. You can always buy—it is never a problem to buy,” Montepeque explained.

Montepeque cited the case of countries like Italy, which has been depending on Libyan oil exports.

He noted that when Libya stopped exporting due to the conflicts in the Middle East, Italy needed only to look for an alternative source for its oil requirements.

“So you shouldn’t stockpile, it’s not a good idea,” he said in a briefing.

Strategic reserve

The national government announced last April that it wanted to engage in stockpiling due to fears of supply disruptions that may be caused by the unrest in major oil producing countries in the Middle East, where the Philippines imports much of its fuel requirements.

Stockpiling was among the options earlier considered by the economic managers to increase the country’s fuel inventory levels, which at one point went down to less than 30 days.

Another option considered by the government would be to lend to oil companies.

Almendras said they were unwilling to take the risk of building up inventories.

PNOC Exploration Corp., the upstream oil and coal exploration arm of state-run Philippine National Oil Co., had then put forward a proposal to import fuel since it had the funds and the expertise to do so.

Almendras said an initial 50 million liters of diesel were supposed to have arrived last May, but this volume was just enough to serve the country’s requirements for one day.

He said it would be embarrassing to call this importation as “strategic reserve.”

Two weeks after the government’s announcement, the Department of Energy then issued a clarification, saying that the diesel importation made by PNOC EC was merely an “inventory augmentation program. /Inquirer