DOE assures stable LPG prices over next few weeks

The Department of Energy (DOE) assured yesterday that the price of liquefied petroleum gas (LPG) or cooking gas will remain stable over the next few weeks.

"The contract price of oil is moving sideways of LPG in the month of March. So we do not anticipate any (upward) movement in LPG price," Energy Undersecretary Peter Abaya said.

However, it would be noted that LPG international contract price for March increased to $380.50 per metric ton from $369.90 in February and $369 in January.

Yesterday, Seaoil Philippines Inc. and Flying V increased their pump petroleum prices anew by 50 centavos per liter. This is part of the small oil firms’ effort to recoup some P10 per liter under-recoveries incurred for the month of March.

A series of oil price hikes, which could be as frequent as twice weekly, is expected until the oil companies recoup their under-recoveries.

The major oil players — Petron Corp., Pilipinas Shell Petroleum Corp. and Caltex Philippines Inc. — are yet to announce a similar price adjustment.

Newly-appointed Energy Secretary Raphael Lotilla told a press conference that monitoring the pricing methodology will likely be one of the areas to be tackled by the five-man review committee for the Oil Deregulation Law.

"One of the major objectives is to determine what is really to be used in monitoring movement of oil prices — whether Dubai crude or MOPS (Mean of Platts Singapore)," he said.

Consumer and transport groups have been asking the DOE to ask the oil firms to reveal the benchmark they are using in pricing their products. Oil prices, under the Oil Deregulation Law, are dictated by the market. Thus, oil companies are free from any intervention specially by the government.

Consumer and Oil Price Watch chairman Raul Concepcion had argued that the consumers have the right to know what they are paying for.

Last month, the DOE announced the formation of a five-man independent panel to review and recommend possible changes in Republic Act 8479 or the Downstream Oil Industry Deregulation Law of 1998.

The members of the panel are Peter Lee Yu, dean of the College of Economics of the University of Asia and the Pacific; Alberto Suansing, secretary general of the Confederation of Land Transportation Organization of the Philippines; Merceditas Garcia, president of the Petroleum Dealers Association of the Philippines; and Joey Leviste, former executive director of the former Petroleum Board.

Meanwhile, Lotilla assured that while international oil prices are on the upswing, the DOE will see to it that the domestic oil price increases will be "just and reasonable." "We will make sure that no one will take advantage of the volatile oil price movements," he said.

Seven years following the deregulation of the industry, about P22.85 billion in total investments have been poured in with some 362 oil players presently engaged in different downstream activities. These include 45 companies which are into liquid fuel bulk marketing and another 288 firms into retail marketing.

One of the most attractive businesses is the LPG sector with new players capturing 40 percent market share.

Prior to the passage of the Oil Deregulation Law in 1998, the oil industry was practically controlled by the three major oil companies — Petron, Shell and Caltex.

During that time, an Oil Price Stabilization Fund (OPSF) was used to cushion crude/foreign exchange volatility which resulted in price movements. However, the industry fund had to be subsidized by the government so prices can be maintained at lower levels.

Some sectors criticized the law, which they said had resulted in higher fuel prices as government no longer controlled the pricing, exportation, and importation of petroleum products.