DOE on recent price cuts: Oil firms may have shortchanged customers
Customers deserved a price cut of 14-24 centavos more per liter in their gasoline purchases this week, the Department of Energy (DoE) said.
The DoE added diesel prices should have gone down by 6-16 centavos more than the price cuts oil firms implemented.
For the latest weekly price adjustments, most of the oil firms including Petron, Pilipinas Shell and Chevron Philippines (Caltex) reduced gasoline prices by P1.45 per liter and diesel by 60 centavos per liter.
The Philippines’ two oil refiners as well as Chevron are the biggest companies in terms of market share in fuel retailing.
Combined, these three companies represented half of all fuel sold in the Philippines during the first half of 2019—25 percent for Petron, 18 percent for Shell and close to 8 percent for Caltex.
Phoenix Petroleum, with a market share of 7.1 percent, implemented a bigger reduction for gasoline at P1.55 per liter but smaller for diesel at 50 centavos per liter.
On Wednesday, Assistant Energy Secretary Leonido J. Pulido III said in a briefing in Malacañang, “historically, the computations arrived at by the DOE and the oil companies had been the same.”
Pulido said that, “for the first time, this week, there has been a difference.”
Thus, the DOE issued show cause orders for the oil companies to “explain how they arrived at their computation.” The firms have until Monday to respond.
Pulido also said while the oil industry was deregulated, the DOE could pursue administrative or criminal cases against the oil firms if their explanations were not satisfactory.
Meanwhile, the price of Dubai crude has kicked up again weeks after the destructive attacks against Saudi Arabian facilities.
As of Oct. 1, the price of Dubai crude was at $61 per barrel, jumping from $56.71 per barrel on Sept. 30.
The Asian benchmark had already fallen from $66.11 per barrel on Sept. 16 or the first trading day after the attacks.
Renato Reyes Jr., secretary general of the Bagong Alyansang Makabayan, said the oil companies indeed should be made to explain why the recent oil price rollback was smaller compared to DOE estimates.
“Up to now it is not clear how oil companies arrive at their prices,” Reyes said in an interview. “The difference between the actual rollback and DOE computations, even if only in centavos, can translate to millions in excess profits for oil companies.”
He also said it was even more anomalous that oil companies sell their products based on prevailing world prices, even if they acquired these at earlier, much lower prices.
“Oil companies have 30-day inventories (and) they got their stocks at lower prices even before the massive P2.35-per-liter increase last week,” he added. “This is the problematic aspect of automatic adjustments under a deregulated environment.”
