Oil firms still undecided on price rollback

Oil companies have not yet indicated plans to roll back the pump prices of their products despite the downward trend of crude prices in the international market.

"Not just yet. We still have under-recoveries that we have failed to recoup from consumers," Independent Philippine Petroleum Companies Association (IPPCA) and Eastern Petroleum Corp. (EPC) chairman Fernando Martinez told reporters.

Petron public affairs manager Virginia Ruivivar, on the other hand, said they have yet to come up with a computation by next week.

"By next week we will be able to know the trend. But in case there will be an oil price reduction, it will be reflected next month," Ruivivar said.

Consumer advocate Raul T. Concepcion has earlier urged the oil firms to roll back the price of diesel by 30 centavos per liter to appease the transport group and avert a possible fare hike increase.

But Martinez argued that based on their computation, they have an under-recovery for the month of December of P1.70 and 80 centavos per liter for diesel and gasoline, respectively.

"It will be illogical to have a price rollback when in fact we have not yet recouped our under-recoveries. If there would be a decline in crude prices, we will just offset our under-recovery and will mean that we will just keep our prices steady," he said.

Meanwhile, Facts Inc. president and oil expert Fereidun Fesharaki, in an industry briefing, said domestic oil prices will likely soften as world crude starts to show sign of improvement.

Dubai crude, a benchmark being use by local oil players in pricing their products, will hit an average of $27.50 per barrel in the first quarter of 2004. This will improve to $24 in the next two quarters and further to $26 in the fourth quarter.

For the whole of 2004, Fesharaki said the average Dubai crude may hit $3 to $4 below the 2003 average of $26.79 per barrel.

Fesharaki attributed the projected softening of crude prices to slower demand this year compared to 2002 particularly in China.

He said the increase in the supply of non-OPEC (Organization of Petroleum Exporting Countries) by 1.5 million barrels per day within the year will also help in the decline in the prices of crude for 2004.

Another factor that can contribute to the drop in crude prices in the world market is the possible move of OPEC to cut production by next month.

The DOE, meanwhile, said world oil prices have been in the downtrend in the last few days despite indications that OPEC will not raise oil production during its meeting today.

Based on DOE data, Dubai crude has started to soften as early as Jan. 27 to $27 per barrel from $29 per barrel level. Dubai crude has dropped by $1.17 to $27.70 per barrel average during Feb. 2 to 9 from the $28.87 average in January.

Unleaded gasoline based in MOPS (Mean of Platts Singapore) drastically plunged by 14.32 percent ($6.34) to $37.91 per barrel from the January average of $44.25. Diesel also significant fell by 7.77 percent ($3.22) to $38.19 per barrel from $41.41.

The DOE monitoring shows that world oil prices are likely to further dip in the second quarter of the year due to the rising production of the non-OPEC member countries and the anticipated entry of Iraq’s production in the world oil market.

World oil prices are also expected to fall as winter demand for heating oil wanes.

"Should world oil prices continue to fall in the coming days, we might see local oil prices to follow the same trend," DOE Secretary Vincent Perez said.