Home
MANILA, Philippines—Oil companies are exploiting the unrest in the Arab world to raise pump prices of gasoline way beyond their purchasing cost 30 to 55 days ago, Sen. Ralph Recto said Tuesday.
“They bought their oil cheap. Now, they’re charging very high and they’re using that because of the Middle East crisis and because the spot prices are going up today,” Recto told reporters.
He pleaded with oil firms “to hold off their greed even if it would be a lame attempt to show to the public that they are really sensitive to the people’s already dire situation.”
On March 1, amid the unrest in Libya and other oil-producing countries, oil companies jacked up the prices of gasoline by P1.25 per liter and by P1 per liter for diesel, further increasing the burden on Filipino consumers.
Gasoline is now sold at more than P52 a liter in Metro Manila.
Also effective on Tuesday, prices of liquefied petroleum (LPG) gas were raised by P1.50 per kilogram. An 11-kg LPG cylinder now costs more than P655.
The militant Bagong Alyansang Makabayan (Bayan) slammed the “latest staggering oil price hike.”
Protect consumers
Bayan secretary general Renato M. Reyes Jr. urged the Aquino administration to find ways to protect consumers from high prices.
“The latest increase is the product of speculation in the oil markets. Whether or not there is conflict in the Middle East and North Africa, speculators will always find ways to push oil prices higher so that they may reap super profits,” Reyes said.
Lift VAT on oil
Reyes said President Benigno Aquino III must take seriously the proposal to scrap the value-added tax on oil products to provide immediate relief for consumers. “This can lower oil prices by more than P5 a liter,” he said.
Recto, chair of the Senate ways and means committee, said oil companies were maintaining an inventory of 30 to 55 days, and hence, should peg pump prices at the purchasing cost, not current prices.
“They should not be raising prices every week. Many of those quoted on TV are spot prices, prices today or in the future. That was not the cost when they bought their oil,” said Recto, a former chief of the National Economic Development Authority.
Extraordinary profits
The companies, the senator said, should practice the principle of “first in, first out” on their oil stocks. Otherwise, they would be reaping profits for every round of increases.
“I will make a bet that they will have extraordinary profits in the first quarter,” he said.
Recto said it was unconscionable for the oil companies to raise pump prices when the government was scrambling to evacuate and repatriate thousands of Filipino workers out of troubled Libya.
Convene task force
In view of the price increases, the Department of Energy (DoE) should convene its task force with the Department of Justice and demand an explanation from the companies, Recto said.
“Let the oil companies explain so the people will understand,” he said. “Let them tell the oil companies, ‘Hey, you bought your products 30 to 55 days. Why are you charging consumers at the assumed current prices?’”
Amid the oil crisis in 2008, the task force was reinvigorated with additional powers. It can now subpoena firms engaged in cartelization and predatory pricing.
Before energy officials come out on TV and say that price increases were based on current prices, they should factor in the “inventory period,” Recto said.
“At the same time, they’re not calculating what the prices are in the Visayas and Mindanao. But the price in the Visayas and Mindanao is P5 to P8 higher than in Metro Manila. You don’t hear anything from the DoE,” he said.
Prices to further go up
A report from the DoE quoted an oil analyst and energy consultants in Singapore as saying the “geopolitical tensions in the crude-rich Middle East keep oil prices generally higher, as traders worry over the potential for supply disruption.”
Peter Lee U, dean of the School of Economics of the University of Asia and the Pacific, said local pump prices were likely to follow such movements abroad but declined to comment on how far prices could shoot up as such speculations may drive prices artificially.
“This is more political so it’s hard to predict how much higher it will go and how long it will take before these issues can be resolved,” he said in an interview.
[You must be registered and logged in to see this link.]
“They bought their oil cheap. Now, they’re charging very high and they’re using that because of the Middle East crisis and because the spot prices are going up today,” Recto told reporters.
He pleaded with oil firms “to hold off their greed even if it would be a lame attempt to show to the public that they are really sensitive to the people’s already dire situation.”
On March 1, amid the unrest in Libya and other oil-producing countries, oil companies jacked up the prices of gasoline by P1.25 per liter and by P1 per liter for diesel, further increasing the burden on Filipino consumers.
Gasoline is now sold at more than P52 a liter in Metro Manila.
Also effective on Tuesday, prices of liquefied petroleum (LPG) gas were raised by P1.50 per kilogram. An 11-kg LPG cylinder now costs more than P655.
The militant Bagong Alyansang Makabayan (Bayan) slammed the “latest staggering oil price hike.”
Protect consumers
Bayan secretary general Renato M. Reyes Jr. urged the Aquino administration to find ways to protect consumers from high prices.
“The latest increase is the product of speculation in the oil markets. Whether or not there is conflict in the Middle East and North Africa, speculators will always find ways to push oil prices higher so that they may reap super profits,” Reyes said.
Lift VAT on oil
Reyes said President Benigno Aquino III must take seriously the proposal to scrap the value-added tax on oil products to provide immediate relief for consumers. “This can lower oil prices by more than P5 a liter,” he said.
Recto, chair of the Senate ways and means committee, said oil companies were maintaining an inventory of 30 to 55 days, and hence, should peg pump prices at the purchasing cost, not current prices.
“They should not be raising prices every week. Many of those quoted on TV are spot prices, prices today or in the future. That was not the cost when they bought their oil,” said Recto, a former chief of the National Economic Development Authority.
Extraordinary profits
The companies, the senator said, should practice the principle of “first in, first out” on their oil stocks. Otherwise, they would be reaping profits for every round of increases.
“I will make a bet that they will have extraordinary profits in the first quarter,” he said.
Recto said it was unconscionable for the oil companies to raise pump prices when the government was scrambling to evacuate and repatriate thousands of Filipino workers out of troubled Libya.
Convene task force
In view of the price increases, the Department of Energy (DoE) should convene its task force with the Department of Justice and demand an explanation from the companies, Recto said.
“Let the oil companies explain so the people will understand,” he said. “Let them tell the oil companies, ‘Hey, you bought your products 30 to 55 days. Why are you charging consumers at the assumed current prices?’”
Amid the oil crisis in 2008, the task force was reinvigorated with additional powers. It can now subpoena firms engaged in cartelization and predatory pricing.
Before energy officials come out on TV and say that price increases were based on current prices, they should factor in the “inventory period,” Recto said.
“At the same time, they’re not calculating what the prices are in the Visayas and Mindanao. But the price in the Visayas and Mindanao is P5 to P8 higher than in Metro Manila. You don’t hear anything from the DoE,” he said.
Prices to further go up
A report from the DoE quoted an oil analyst and energy consultants in Singapore as saying the “geopolitical tensions in the crude-rich Middle East keep oil prices generally higher, as traders worry over the potential for supply disruption.”
Peter Lee U, dean of the School of Economics of the University of Asia and the Pacific, said local pump prices were likely to follow such movements abroad but declined to comment on how far prices could shoot up as such speculations may drive prices artificially.
“This is more political so it’s hard to predict how much higher it will go and how long it will take before these issues can be resolved,” he said in an interview.
[You must be registered and logged in to see this link.]