DOE sees lower LPG prices

Despite rising crude oil prices in the world market, the Department of Energy (DOE) is expecting prices of liquefied petroleum gas (LPG) or the "cooking gas" to go down in the next few days.

Energy Secretary Vincent Perez said the relatively stable LPG prices in the world market is expected to have a trickle down effect on local market.

"The impact of the lower LPG prices in the world market should be left in the local front. We might even see downward adjustments soon (in the prices of LPG)," Perez said.

But Perez said he expects international crude prices to remain volatile in the next few months following the continued conflict in the Middle East.

"We have to monitor what the oil companies will do in May. Dubai crude prices are very volatile right now from a low of $21 per barrel to a high $25 per barrel. Iraq’s oil embargo is still being imposed. The Saudi Arabia continues to supply oil and said it will not use oil as a weapon," Perez said.

The Big 3 oil companies – Petron Corp., Pilipinas Shell Petroleum Corp. and Caltex Philippines Inc. – have raised their prices last month by about 87 centavos per liter, as against their under-recovery of P1.25 to P1.35 per liter.

As of March 2002, the contract price for LPG in the world market averaged at $192.83 per metric ton (MT) compared to $197.83 per MT in February. Between April 1 and 15, the averaged contract price stood as $196 per MT.

The price of LPG in the local market ranged from P225 to P249 for 11-kilogram (kg) cylinder tank while the 2.7 kg cylinder is at P90.

Perez said the strong market competition in the LPG sector brought about by the entry of the new oil players has consequently and effectively resulted in reasonable prices of the product.

To date, the new LPG players account for a significant 26 percent market share. Most of these new LPG players have penetrated the provinces, which for so long have been overlooked by the major oil firms.

As of end-December 2001, the total investments infused in by the 14 new firms operating in the LPG sector alone have reached P4.85 billion.