Too little oil price rollback, a consuelo de bobo

May. 21, 2012

News Release
May 14, 2012

Too little oil price rollback, a consuelo de bobo

Bayan Muna Partylist Representative Teddy Casiño said today that recent oil price rollbacks are still not enough considering that as of March 2012, the price of diesel is overpriced by as much as PHP 7.86 (USD 0.18) per liter and gasoline by PHP 16.18 (USD 0.37) per liter.

Citing data from a recent study made by Bagong Alyansang Makabayan, Casiño said since the oil industry was deregulated in 1999, the upward movement of local oil prices were quick and often exceeded the movements in global oil prices and foreign exchange.  In contrast, the downward movement was slow and often small in proportion to the decrease in global oil prices and foreign exchange.

“Mabilis at sobra kung tumaas, mabagal at kulang pag bumaba.  Pero dahil sa inilabas natin nung isang Linggo e parang bumabawi naman sila ngayon.  Mukhang nahalata na kasi sila,” Casiño described the movement of local oil prices.

He revealed that under such a scheme of multiple overpricing, from January 1999 to March 2012, local oil companies have been able to accumulate an overprice of as much as PHP 7.86 (USD 0.18) per liter for diesel and PHP 16.18 (USD 0.37) for gasoline.  With the latest rollback now, oil companies should still roll back at least PHP 6.26-6.36 (USD 0.14-0.15) on diesel prices and PHP 14.58-14.68 (USD 0.33-0.34) in regular gasoline prices.  “In other words, consuelo de bobo lang itong roll back na ito,” he said.

The study was based on the monthly movement of Dubai crude and foreign exchange (forex) rate based on a rule of thumb used by one major oil firm that pegged the movement of local prices at around PHP 1/ liter (USD 0.02) for every dollar change per barrel of oil and around PHP 0.30/liter (USD 0.01) per peso change in the forex.

Summary of overpricing estimates, 1999-2012 (P per liter)
Year Ideal Diesel Gasoline
Actual Gap* Actual Gap*
1999 3.95 1.84 (2.11) 2.61 (1.34)
2000 1.17 4.35 3.18 4.06 2.89
2001 (1.39) (1.32) 0.07 (1.87) (0.48)
2002 3.27 1.48 (1.79) 1.75 (1.52)
2003 0.90 2.33 1.43 3.09 2.19
2004 2.66 6.68 4.02 6.90 4.24
2005 6.49 7.44 0.95 7.85 1.36
2006 0.36 2.39 2.03 1.46 1.10
2007 4.42 5.10 0.68 7.10 2.68
2008 (11.47) (3.17) 8.30 (9.16) 2.31
2009 10.73 1.68 (9.05) 10.44 (0.29)
2010 2.83 4.41 1.58 6.00 3.17
2011 5.22 4.55 (0.67) 3.90 (1.32)
2012** 4.21 3.45 (0.76) 5.40 1.19
TOTAL 29.14 37.76 7.86 49.53 16.18

*actual minus ideal
**Jan. to Mar. only

Malinaw dito na ginigisa tayo sa sarili nating mantika ng mga oil companies at dapat itong makita at solusyunan ng pamahalaan.  In 2010 alone, Petron raked in PHP 7.92 billion (USD 0.18B)in profits;  Shell, PHP 16.5 billion (USD 0.38B); Chevron, PHP 3.9 billion (USD 0.09B); and Total, PHP 1.03 billion (USD 0.02B).  Though already in the billions, these declared profits are still small because they do not include the local overpricing earlier mentioned.  We want the Independent Oil Price Review Committee (IOPRC) to expedite their work and look into this immediately,” Casiño concluded.

Starting yesterday, Unioil Petroleum Philippines rolled the back prices of diesel by PHP 1.65 (USD 0.04) a liter and of premium gasoline by PHP 1.50 (USD 0.03).  Eastern Petroleum cut prices of diesel by PHP 1.70 (USD 0.04), premium gasoline by PHP 1.60 (USD 0.04) a liter and kerosene and regular gasoline by PHP 1.50 (USD 0.03), effective today.  Pilipinas Shell Petroleum Corp., Petron Corp., Chevron Philippines and Phoenix Petroleum Philippines also rolled back prices of premium gasoline by PHP 1.70 (USD 0.04) a liter, diesel by PHP 1.60 (USD 0.04) and kerosene and regular gasoline by PHP 1.50-1.60 (USD 0.03-0.04) a liter.

Bayan Muna Rep. Teddy Casiño, 09209035683 

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