Tuesday, October 14, 2008 Editorial: P3,647 per barrel Dubai crude
ON MONDAY, the price of Dubai crude fell to only $76.48 per barrel. In Monday's foreign exchange rate of P47.69 to US$1, its price has been reduced to just P3,647.33 per barrel.
But the current pump price of gasoline remains between P49.07 to almost P50 per liter.
The price is more than P1 higher when the Dubai crude price was still US$103 or P4,327 -- at US$1 to P41.82 exchange rate -- per barrel last April.
More than a week ago, when the Dubai crude was priced at US$90 or PP4,233 per barrel, the National Economic and Development Authority (Neda) said the pump prices of gasoline and diesel were overpriced by P5 per liter.
Neda chief Ralph Recto said oil companies should cut by P5 per liter the pump prices of their products.
The Consumer and Oil Price Watch (COPW), on the other hand, stated that oil companies have been overcharging consumers by P8 per liter.
COPW chairman Raul Concepcion said oil companies must be transparent and should explain the P8 difference between the actual pump prices of their products vis-à-vis their supposed prices of only P44.62 per liter of gasoline and P36.43 per liter of diesel.
As expected, oil companies' executives have refused to become transparent. Pilipinas Shell said the computation is "a complicated formula" which will not be transparent to ordinary Filipinos, adding that aside from costs, market forces also influence pricing.
Well, perhaps computation really gets complicated when the result would mean lesser profit.
The company that makes multi-billion pesos in net income per year also cited the deregulated market where the final determinant is market or competitive forces. But where is market competition when big oil companies always hike and reduce the prices of their product at almost the same time and at the same rate?
Last week the oil companies were forced to reduce their products' pump prices by a mere P1 per liter.
Of course, the P1 per liter reduction was too little compared to P5 or P8 per liter decrease Neda and COPW want to be implemented.
And now that the Dubai Fateh spot price below $77 per barrel, there is no doubt consumers deserve bigger pump prices reduction.
From P4,233 per barrel last week to Monday's only P3,647 per barrel, oil companies are obviously buying petroleum from the international market at a much lower price. Simple computation shows a P586 per barrel savings on the part of the oil companies.
Oil companies, however, prefer a "complicated" computation that ordinary folks won't "understand." And such is not really too complicated to be understood. It's not mind over matter. It's profit over what really matters.
