Small oil players suffer 10% drop in sales in Q1

The country’s small oil players suffered 10- percent drop in sales during the first three months of 2005 due to government’s energy conservation efforts and programs.

"Our sales contracted by 10 percent in January, February and March. Maybe people have felt the need to conserve and also as a response to government’s call to conserve," said Independent Philippine Petroleum Companies Association (IPPCA) chairman and Eastern Petroleum Corp. (EPC) president Fernando Martinez.

Martinez said their group should thus not be blamed for rising crude prices as they are also "victims" of these incidents.

"Demand has contracted affecting our sales. We are also suffering from higher prices since we can not pass all of our under-recoveries all at the same time," he said

He said with the request of some sectors, oil firms are also compelled to be on a "subsidy mode".

On the part of EPC, he said they have been offering price discount on diesel in two of their stations in Caloocan and Marikina.

He said the government should also consider giving in to the petition of the transport groups to increase fares since they are expecting global prices to remain high in the next few weeks.

"If this will be the case, then they should grant a fare hike of 15 to 25 percent for the first kilometer to be increased from P5.50 to P7 to P8," he said.

Martinez said the oil companies should not be used as a last resort by the government. "The government should be equally sensitive to the needs of the oil companies."

Independent oil players or oil importers at present account for 15 percent of the oil industry. Before oil deregulation law allowed the entry of new players, the industy was controlled by three big oil firms – Petron Corp., Pilipinas Shell Petroleum Corp. and Caltex Philippines Inc.

At present, oil companies claimed they still need to recoup an average of P4.20 per liter under-recoveries for the month of March. The last time they raised their prices by 50 centavos per liter was lost April 3. Small, staggered oil price hikes are expected to last until the oil firms recover their under-recoveries amounting to more than P3 per liter.

Martinez said they hope prices will stabilize this month so they would not need to raise prices again. "Instead of a rollback we will not increase our prices."

Diesel now average about P22 to P25 per liter while gasoline is priced at about P29 to P31 per liter.