Militant groups demand P2 rollback in oil prices

Militant groups demanded yesterday a P2 reduction in the price of petroleum products in the wake of reports that major oil companies are contemplating a measly rollback of their rates.

This developed as Energy Secretary Mario Tiaoqui said he expects the the country’s so-called "Big 3" oil firms — Shell, Petron and Caltex — to follow the lead of smaller industry players which cut their rates by an average of 20 centavos per liter last week.

The Kilusang Mayo Uno (KMU), the Pinagisang Samahan ng mga Tsuper at Opereytors Nationwide (Piston), and the urban poor group Kalipunan ng Damayang Mahihirap (Kadamay) all called for a P2 cut in the price per liter of gasoline and diesel being sold by various companies in the country.

KMU Chairman Crispin Beltran, in a statement, warned that they will launch another general strike or "welgang bayan" if the price of oil products would not be reduced.

"We will not settle for a measly 50-centavo rollback. A rollback should at least be P2 for it to benefit the public," he said.

Piston chairman Medardo Roda, on the other hand, pointed out that their P2 demand could even be considered "conservative" since the price of oil in the international market has gone down by at least $10 per barrel last month.

"There is a rule of thumb that you should decrease your price by 26 centavos per $1 reduction," he said. "If we compute strictly, oil companies should lower their prices now by as much as P2.60. We deserve a big rollback as a form of economic relief."

For its part, the 300,000-strong Kadamay said it is ready to support a nationwide transport strike if the P2 rollback will not be implemented.

"The 20-centavo rollback by small and new petroleum players is not enough. The planned 50-centavo announced rollback by Petron is very insulting. We demand a P2 rollback, nothing less," said Carmen Deunida, head of the group.

‘Reasonable’

Industrialist Raul Concepcion, who heads the Consumers and Oil Price Watch, labeled the claim of said groups as "reasonable" and pointed out that oil companies can afford to cut their prices by at least P1.40 to P1.60 a liter without sacrificing their revenues.

According to Concepcion, oil firms can technically slash their rates by P2.60 per liter before deducting their "cost recoveries" or the amount which they claim to have lost in the series of oil price increases in the past.

He also stressed that the "Big 3" should not use the coming meeting of the Organization of Petroleum Exporting Countries (OPEC) as a reason for not lowering their rates.

"The issue here is the rollback of oil prices in January and it has nothing to do with the OPEC meeting," he said. "If the average price of crude at the end of January compared to December is higher, then such should be reflected in a price increase in February."

The powerful OPEC will hold a meeting on Jan. 17 to discuss oil prices which have been falling recently. Last Dec. 31, the six members of the Gulf Cooperation Council, which include Saudi Arabia and Kuwait, called for reduced oil production this month to prevent prices from dropping further.

OPEC increased production four times over the past year to get prices down. In September, oil prices topped $30 a barrel, the highest price in a decade, but they have hovered closer to $20 lately thanks to OPEC’s production increases, more non-OPEC production and a mild European winter that has lowered demand for heating oil.

‘Over recoveries’

Concepcion, meanwhile, urged Tiaoqui to look into the possibility that oil companies may be engaging in "over recoveries" by passing on to consumers the interest rate adjustments that they should shoulder when they avail of expensive dollar loans.

"They should absorb the losses incurred from business loans they acquired which should not be passed on to consumers," he stressed.

Tiaoqui, for his part, said there is no reason why the country’s big oil companies would refuse to reduce their rates.

"We expect more significant price reductions and that the other oil companies, especially the Big 3, will follow suit," he said.

New players Seaoil and Flying V both cut their rates by 20 centavos last Jan. 1 and Eastern Petroleum, which runs gasoline stations in the provinces reduced its prices by the same amount the following day.

Tiaoqui admitted that crude prices abroad have gone down considerably to $21.65 per barrel in December from $30.32 in November, giving local oil companies more reasons to cut their prices.

He added that the peso had been stable last month, with an average exhange rate of P49.91 which was roughly the same as that in November.

The STAR tried to reach officials of the Big 3 oil firms for comment but they were not immediately available. Earlier, Petron and Shell said they would be reducing their rates before or after the scheduled OPEC meeting. – Mayen Jaymalin, Donnabelle Gatdula, Sheila Crisostomo, Jose Rodel Clapano