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Sunday, December 10, 2023

Oil players in hot water over pump price swings

Energy Secretary Alfonso Cusi has ordered 13 oil companies to explain why their oil price rollback was lower than government computations and why their increase in the price of cooking gas was higher than expected.

READ: Phoenix and Isla join bandwagon, raise LPG prices

“Our actions support our mandate to protect consumer welfare and ensure fair oil industry practices,” Cusi said in a statement.

“The SCOs [show cause orders] would provide these companies the opportunity to explain how they arrived at their respective oil price rollback calculations,” he said.

The department declined to name the 13 oil companies but gave them until Oct. 7 to formally respond to the government order.

Energy Assistant Secretary Leonido J. Pulido III said the oil companies implemented a lower price cut than what was computed by the department.

The oil firms cut the price of gasoline by P1.45 to P1.55 per liter and diesel by P0.50 to P0.60 per liter early this week.

But Pulido said by their calculations, the oil firms should have cut gas prices by 22 centavos more for gasoline and six centavos more for diesel.

“We want them to explain it; we are not saying they are wrong,” he said.

Pulido added that for liquefied petroleum gas, the oil companies raised prices higher than the world market.

“We’re also asking LPG suppliers and importers to explain in three days,” he said.

The oil companies raised the price of LPG from P3.98 a kilo to P4.50 a kilo effective 12:01 a.m. Oct. 1.

“We were just surprised. Historically, our computations would match. It prompted us to ask them to explain. This is the first time over the last three years. We really want to hear [from them] in the next few days,” Pulido said.

He said government is looking at importing cheaper oil through state-run Philippine National Oil Co. as part of its mid-term plans to ensure energy security.

“We are preparing a bill that we intend to introduce to Congress where we will ask for the legislation of a strategic reserve,” he said.

He said the department is also considering amendments to the Oil Deregulation Law since under a deregulated environment, government cannot dictate oil prices.

In the House of Representatives, a lawmaker has filed a resolution calling for an investigation into the sudden increase in fuel prices in September, a few days after drone attacks knocked out nearly 60 percent of Saudi Arabia’s oil production.

In House Resolution 390, Rep. Stella Luz Quimbo of Marikina City said representatives from oil companies told the Senate committee on energy on Sept. 23 that the country had sufficient fuel supply and could turn to other countries if tensions in the Middle East intensify.

Despite this pronouncement, Quimbo said, the oil companies simultaneously announced a price increase of P2.35 per liter on gasoline, P1.80 per liter on diesel and P1.75 per liter on kerosene for the week, resulting in the highest increase for 2019.

“The sudden increase in fuel prices took place allegedly as a result of the Saudi Arabia supply crisis, which oil companies alleged affected their capacity to supply oil,” Quimbo said.

The resolution also noted the oil price increase took effect nine days after the drone attacks, despite the mandatory requirement to maintain a 15-day supply of petroleum products.

Refiners, moreover, must maintain a minimum inventory equivalent to 30 days’ supply.

Given this stock, the fuel being sold now should be insulated from the supply problem brought about by the Saudi attack, Quimbo said.

Quimbo said the congressional inquiry is intended to determine “the legality, necessity, and determination of the propriety of these sudden fuel price increases.”

READ: Petron leads LPG price hike, oil cut

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