Caltex bucks reimposition of 3% oil tariff

Lifting the suspension of the three-percent tariff on oil imports will result in an increase in domestic oil prices, an official of Caltex Phils. Inc., one of the country’s Big "3" oil companies said.

"The lifting of the tariff suspension will create an upward pressure on the prices of local fuel and will translate to an immediate reaction in oil prices in the coming weeks," Caltex country chairman Nick Florio said.

Florio said the reimposition of the three-percent tariff on oil imports will increase oil prices by about 20 to 30 centavos per liter.

The three-percent tariff was suspended by the Estrada government on Nov. 11 last year to cushion the effects of rising crude oil prices in the world market and the deterioration of the peso against the dollar.

The absence of a new energy secretary up to now, who is supposed to decide whether the tariff suspension will be lifted or not, made the imposition of the three percent tariff automatic. "Before the tariff suspension, oil companies were supposed to adjust local prices by about 73 centavos per liter in November. The projected adjustment, however, was pared down to 44 centavos per liter because the tariff suspension staved off 29 centavos of the needed 73-centavo per liter price adjustment," Florio said.

The Caltex executive pointed out that oil companies never got to adjust their prices since September 2000 in consideration of the prevailing socio-political condition.

"Thus, with the reimposition of the oil import tariff, that 29-centavo per liter will now translate to additional cost on price of crude," he said, noting that this would also add to the pressures being caused by the continuous increase in prices of crude oil in the world market.

Oil companies rolled back the prices of their pump products on Jan. 8 this year as a result of the softening of the Mean of Platt’s Singapore (MOPS) price in December compared to its November 2000 levels.

A second round of price rollback was supposed to be implemented in the latter part of January on the hope that the decline in MOPS prices would continue. However, this did not push through as prices already have moved upwards due to the decision of OPEC to cut production levels. Since the beginning of the year, the MOPS price of unleaded gas has gone up more than 22 percent while MOPS diesel price has shot up 10 percent.

On the other hand, the peso depreciated by P1 or two percent to 50.93 to a dollar in January 2001 from 49.92 in December 2000. – Donnabelle Gatdula