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Only 2 oil firms have so far announced it will comply with the
directive of President Arroyo to revert and then freeze pump prices to
October 15 levels due to the state of emergency in Luzon while another
said it is still considering its legal options.
Independent oil players Unioil Petroleum Philippines Inc. and Flying
V said they will reduce pump prices of petroleum products by P2 per
liter for diesel and P1.25 per liter for gasoline. Unioil said it
will roll back prices effective 12:01 a.m. Monday 26th October 2009.
Flying V however has yet to announce the schedule of its price
reductions.
President Arroyo signed Executive Order (EO) 839 Friday directing oil
companies to “retain the level of the retail price of petroleum
products prevailing on October 15, 2009, which was one week after the
last landfall of typhoon ‘Pepeng.’”
The price freeze was made, according to Arroyo’s EO: “to respond
immediately to the clamor of the Filipino people to prevent
unreasonable increase in the prices of petroleum products during a
state of calamity.”
Presidential spokesperson for economic affairs Gary Olivar, in a text
message Sunday, said, Malacañang “wants to mitigate the hardships
caused by the recent calamities by temporarily freezing oil prices, the
same as other basic commodities under price ceilings in force.”
Since the declaration of the state of calamity last month, government
has imposed price controls on basic goods but petroleum products were
not included. Despite “Pepeng” and “Ondoy's” devastation, several oil
companies raised pump prices citing increasing international prices but
also prompting public protests and criticisms.
The presidential directive said it was based on Section 14(e) of
Republic Act 8479 or the Oil Deregulation Act. The cited provision in
RA 8479 only states: “In times of national emergency, when the public
interest so requires, the DOE [Department of Energy] may, during the
emergency and under reasonable terms prescribed by it, temporarily take
over or direct the operation of any person or entity engaged in the
[Oil] Industry.” Arroyo’s order also directed a task force of the
justice department and DOE to monitor the implementation of or the
price freeze and to institute complaints against violators.
To comply with EO 839, oil firms will have to revert to prices before
October 19. Most oil firms raised prices by P2.00 per liter for diesel,
P0.85 per liter for regular, P1.50 per liter for kerosene and
P1.25-1.50 per liter for fuel. “Given the almost P2.00 per liter
additional cost in MOPS [Mean of Platts Singapore] which must be
reflected this week on top of last week's increase, it's almost
impossible for any oil company to comply with [the] 15 October price
level,” said Fernando Martinez, Eastern Petroleum Corporation chief
executive,
Martinez said that it would be interesting to see how any oil company
can sustain the price levels at October 15. He cited that this could be
done only if there was a downward movement in international oil prices
this coming week and at a level of $12 per barrel. “We will study our
legal options in consultation with the rest of the industry players,”
said Martinez.
Eastern Petroleum, as well as any of the so-called Big 3, Petron Corp.
Pilipinas Shell Petroleum Corp. and Chevron Philippines (formerly
Caltex), has yet to announce compliance with the presidential order and
set any rollback in the prices of their respective oil products.
Energy Sec. Angelo Reyes had however immediately warned then that
setting a price ceiling on petroleum products would do more harm to the
consumers. "The problem is when you impose a price ceiling, the
cure might be worse than the disease," he said last October 15. Reyes
was then reacting to a directive by President Arroyo for the DOE to
open the books of oil companies to see to it that their prices are at
reasonable levels. He had said controlling oil prices may affect
the supply of petroleum products. He pointed out that the proposal to
include petroleum products in the price ceiling would be harmful not
only to the consumers but also to the whole industry.
Reyes had also said it is against the Oil Deregulation Law to meddle in
oil prices. "We cannot have or we cannot impose a price ceiling on
petroleum products as it is against the law," he said. He said under
the law, the DOE's power is confined in monitoring of oil price
movements which in a way could also be one form of "control". He
said, "We are here to protect the public and to ensure that there is no
cartelization, no predatory pricing, and to make sure that prices
remain reasonable - and that we will do."
The energy department had also defended the October 19 price hikes by
oil companies as it said the increases were reflective of oil prices in
the world market. Reyes had said computations by the DOE’s Oil
Industry Management Bureau showed that diesel prices should have gone
up by P1.97 per liter, based on world oil prices from October 12 to 16
which is almost similar to the P2.00 per liter price hikes made by oil
companies.
DOE data also showed that gasoline prices should have gone up by P1.19
per liter which is very near the at least P1.25 per liter increases
implemented by oil companies. Oil companies reportedly normally round
off their price adjustments.
Petron Corp. had also warned last week that local prices may go up
again in the coming weeks if world oil prices continue their uptrend.
PetrolWorld 251009
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