Thursday, July 03, 2008 One time full increase in oil prices rejected
THE Department of Energy (DOE) and representatives of oil companies on Wednesday turned down calls for the implementation of a one time full increase in the prices of petroleum products.
During Wednesday's stakeholders meeting held at the DOE national office, Energy Secretary Angelo Reyes said it would be unlawful for oil firms to predict the amount that they would need to recover as the prices of fuel in the world market continue to increase.
"The law states that prices must be market determined. Oil companies cannot determine the price (increase)," Reyes said.
He added that even he is not allowed by the law to regulate the price increase since it is driven by market forces.
"It's beyond my control. It is market determined. I am not allowed by law to regulate prices," he said.
But in his presentation, Ed Chua, country manager of Shell Pilipinas, said for the month of June, Shell's under recoveries for diesel products hit P9 per liter, higher than the P7 under recoveries for the month of May.
Chua said for the month of February, recovered cost was placed at P347.91 million; P2.232 billion in March; and P3.609 billion in April.
Data for the recovered cost for the months of May and June were not available yet.
The same data indicated that for the months of March and April, Shell in particular needed to recover P4.11 and P6.03 per liters, respectively, on diesel.
Chua also pointed out that the increase in diesel prices was due to the ongoing movement in international market noting that for the month of May, diesel was placed at US$161.22 per barrel and further went up to US$169.03 per barrel in June.
The transport sectors are demanding for a one time full increase in the prices of diesel.
Efren de Luna, president of the Alliance of Concerned Transport Organization (Acto), asked oil companies to once and for all impose the one time full increase in order for them to determine the possible fare increase they will lodge with the Land Transportation and Franchising Regulatory Board (LTFRB).
Consumer and Oil Price Watch (COPW) advocate Raul Concepcion however disagreed to the imposition of the one time full increase.
"It would not be allowed because if we do, we will have a revolution in our hands," he said.
Like Concepcion, Fer Martinez, president of Eastern Petroleum, rejected the proposed one time full fuel adjustment.
"Staggered increase has always been beneficial to consumers," Martinez said.
He explained that there are some cases that oil companies did not really get the chance to fully recover their under recoveries since the prices of fuel in the world market is fluctuating.
Martinez similarly warned that if they will impose the one time full increase in the prices of fuel, "it may trigger some upheavals".
Last weekend, oil firms imposed a P1.50 per liter increase for diesel, gasoline and kerosene.
The increase was due to the skyrocketing prices of crude in the international market.
Latest monitoring of the DOE indicated that the prices of unleaded gasoline per liter now stands at P60; diesel ranged between P49.50 to P51.47; kerosene at P53.60 to as high as P56.80; and household LPG (liquefied petroleum gas) now ranged from P600 to P671.50 per 11 kg cylinder.
Meanwhile, Reyes assured the public that the government is doing everything they can to address the rising fuel cost problem. He said there are some measures which the DOE in particular is adopting and this includes the provision of subsidies and tariff reduction on fuel imports.
But when asked by the oil companies to suspend the collection of value-added tax (VAT) on fuel, the energy chief said he has no powers to do it.
"We cannot suspend the implementation of the law," Reyes said.
He stressed that the "only way you can suspend or non-implement (the VAT collection) is if you amend the law." (MSN/Sunnex)
