Department of Energy sees P1/kg drop in LPG prices

MANILA, Philippines - The Department of Energy (DOE) said it expects the price of liquefied petroleum gas (LPG) to shrink by at least P1 per kilogram in August.

Energy Secretary Angelo Reyes said yesterday that the contract price of LPG in the global market had been weak in the past few weeks and is expected to remain depressed next month.

“We’ll see a decrease in the price of LPG. That will be effective in the month of August,” Reyes said on the sidelines of the Third WESM Annual Participants Meeting yesterday.

The Energy Department said the weakening LPG price was brought about by a $17 per metric ton (MT) drop in contract price, which is set by suppliers on a monthly basis. This translates to a P10 per 11-kilogram cylinder reduction in price, or roughly P1 per kilogram.

In contrast, the LPG Marketers Association (LPGMA) said a “no change” situation will prevail in the next few weeks.

“The first two weeks [contract prices] were down. But the last two weeks, it was up,” Arnel Ty, LPGMA president earlier said.

As of July 28, an 11-kilogram cooking gas cylinder is selling for P507 and P585 per tank in Metro Manila. Automobile LPG has been retailing between P20.90 and P21.93 per liter.

Reyes said it is still too early to say if consumers could also expect more movements in pump prices after oil companies implemented a P2 per liter hike at the start of the week.

“Today (world) prices have more or less remained the same at $75 to $76 per barrel level. And this is because the demand-supply situation largely remained the same. The demand is curtailed or dampened by some people still doubting that economic recovery is in the offing. As the same time speculation is fueling prices to have pressure upwards,” he told reporters.

The market is likewise watching closely developments in China, which is the second largest user of petroleum products. Prices will move upwards if China retains on hikes its present buying habits.

Likewise, analysts said if demand for petroleum products increase in the next quarter, then prices will definitely start an uphill climb. “That should be a reflection of economic recovery since it is not yet winter buying time,” they added.