From the News! – Your Daily News

by Reuters
from Inquirer.net

NEW YORK— Oil prices fell more than 6 percent to below $70 a barrel on Thursday, touching a 15-month low on rising US inventories and concerns a possible recession would slow demand further.

The Dow Jones industrial average and the S&P 500 slipped in a choppy session on Thursday as major US banks reported huge losses and other companies painted a grim outlook for the battered US economy.

US crude settled at $69.85, down $4.69, after sliding to as low as $68.57, the lowest level since June 27, 2007.

In London, front month November Brent crude, which expires on Thursday, settled at $66.32, down $4.48.

“It’s still a demand story, we’re moving lower following the report,” said Amanda Kurzendoerfer, commodities analyst at Summit Energy in Louisville, Kentucky.

“We saw some very large builds in gasoline and crude oil for the second week in a row. This confirms the fact that demand is truly weakening in the United States,” she added.

Crude oil inventories in the United States rose 5.6 million barrels last week, far exceeding analysts’ expectation of an increase of 1.9 million barrels, as demand in the world’s top consumer continued to fall, the US Energy Information Administration reported.

Gasoline inventories rose 7.0 million barrels, more than double analysts’ forecast of an increase of 2.9 million barrels, as overall product demand over the past four weeks dropped 8.9 percent from year-earlier levels.

US crude has fallen from record highs above $147 hit in July, and has dropped nearly a third in value in three weeks, the steepest such decline since it began trading in 1983 amid the mounting threat of a global recession.

Data from the Federal Reserve showed US industrial production posted the biggest monthly decline since 1974.

“Economic weakness is hitting the stock and oil markets, but the oil price fall is also reflecting a lack of demand. It is very difficult to buy oil if you are having a hard time getting credit lined up,” said Francisco Blanch, head of commodity research at Merrill Lynch.

Analysts have scaled back global oil demand growth estimates after a slew of gloomy economic data that suggest the credit crisis has begun to undermine economic growth in the United States, the world’s top energy consumer.

The Organization of the Petroleum Exporting Countries (OPEC) said on Thursday it had brought forward to Friday next week an emergency meeting to discuss the impact of global recession on oil markets.

Pressure has been mounting within the 13-member group to reduce supplies. There are expectations it may take action to support prices.

Nigerian Oil Minister Odein Ajumogobia said the emergency OPEC meeting was an opportunity to consider options regarding the world oil price but that no course of action had yet been proposed.

“I regard it as an exploratory meeting to review facts and options. Not even tentative proposals have been discussed at this stage,” Ajumogobia told Reuters.

Hurricane Omar weakened rapidly as it surged into the Atlantic on Thursday, after threading its way through the small islands of the northeastern Caribbean as a fiercely powerful storm that ended up causing relatively little damage, US forecasters said.

Roy Pelovello
Manila Standard

President Arroyo yesterday approved the Philippine Energy Efficiency Project, which will replace oil imports with local fuel thus saving the government $120 million annually.

More savings can be realized once the Renewable Energy Bill, just approved by a bicameral conference committee, becomes a law and gets carried out, lawmakers said.

Executive Secretary Eduardo Ermita said Mrs. Arroyo gave the green light for the P2.17-billion project after it was endorsed by the technical board of the National Economic and Development Authority-Investment Coordination Committee during Tuesday’s Cabinet meeting.

“The Philippine Energy Efficiency Project seeks to give form and substance to the policy of energy efficiency, including switching to fluorescent from incandescent bulbs,” Ermita said. The project includes the switch to the use of CNG (compressed natural gas)-fueled engines, Ermita said.

The project is expected to slash the government’s electricity bill by 20 percent and increase the consumption of electric cooperatives by 10 percent from 2007 levels.

According to the Neda-ICC, P1.58 billion of the project cost will be financed by a loan from the Asian Development Bank; P67.5 million will be sourced from the ADB Clean Energy Fund grant; and the remaining P517.5 million will be from the Energy Department’s counterpart fund.

The energy efficiency project is one of the six projects worth P17.4 billion endorsed by the Neda-ICC.

Pampanga Rep. Juan Miguel Arroyo announced yesterday the bicameral conference committee’s swift approval of the Renewable Energy Bill, a landmark legislation that is expected to boost the country’s energy security.

Arroyo lauded the swift passage of the measure, which he said would also yield huge economic benefits and boost the effort to safeguard the environment. He added that this was a notable achievement considering it has taken more than 20 years to get to this stage.

He said the House is expected to ratify the final version of the proposed Renewable Energy Act of 2008 before Congress goes into recess this week so that it could be quickly signed into law by President Arroyo.

“We are justly proud of this landmark measure’s passage, as it demonstrates the political will of this Congress to set aside politics and work as one in helping solve the problems besetting our nation,” said Arroyo, chairman of the House committee on energy.

The bicameral conference committee met to reconcile House Bill 4193 and Senate Bill 2046.

Rep. Arroyo said the bicameral panel agreed to use the Senate version as the working draft and incorporate the salient provisions of the House version with some minor amendments.

Aurea Calica
Philippine Star

Calls for oil companies to roll back fuel prices mounted yesterday as Sen. Juan Ponce Enrile said these firms must be taxed for excess profits if they refuse to bring down prices.

The House of Representatives is also considering the imposition of a windfall profit tax on oil companies if they refuse to reduce pump prices.

Oil prices fell below $90 a barrel on speculation that the spreading financial crisis would exacerbate a global economic slowdown and cut demand for crude oil. But until yesterday, oil companies could not commit to more price cuts.

Enrile said the oil companies could not maintain the prices of fuel in the country on the basis of high crude prices.

“They have to scale down their retail price at this time. Otherwise, we will pass a law to see to it that we will get a portion of their huge profit if they are not going to scale down, because that means that if the cost of crude was down, then their margin will get bigger,” Enrile said.

He warned he would sponsor a bill to impose an excess profit tax on oil companies.

Enrile, chairman of the Senate finance committee, said the recent reimposition of the one-percent tariff on oil was not significant and should not be a reason to maintain high fuel prices.

“That is nothing, that is small. What is one percent of $83? It’s less than a dollar,” Enrile said.

He explained that only the government could pressure oil companies to bring down their prices, but lawmakers could file legislation to force them to give back their profits to the people.

“We agree that business must make a profit, but not too much. A reasonable profit yes, but an excess profit can be subject to an excess profit tax… and then we will use that to help people that are suffering because of their refusal to scale down their retail price,” he said.

‘Review or repeal law’

Enrile filed a bill to review or repeal the Oil Deregulation Law to prevent oil companies’ abuses.

He said he would also like to push for the anti-trust bill to prevent monopolies or cartels among industries, manipulation of prices of commodities, and price discrimination.

He added that a lot of people would be “jailed” if this bill would be passed.

He said a boycott of some oil firms would not make sense because it might affect all operations in the country.

But Sen. Francis Escudero, chairman of the Senate ways and means committee, said it would be better to revise or repeal the Oil Deregulation Law rather than impose a new tax on oil companies.

“The problem is whatever tax, even on excess profit, will be hard to monitor. We might even give them a reason to further increase their prices,” Escudero said.

“For me, the solution is to review or amend the Oil Deregulation Law to teach oil companies a lesson and provide more teeth for the government to sanction companies that do not follow right prices in the world market,” he said.

“Right now, the Department of Energy’s role is a barker and can not seem to guard public interest against the abuses of oil companies,” Escudero said.

He said oil companies had been quick to increase their prices based on world market prices but are not as fast when prices are going down.

He said it should not take months before oil companies could determine how much rollback must be done and that the DOE must make sure to break the cartel among oil companies.

Under the current Oil Deregulation Law, companies could not be forced to scale down prices.

“There is a monopoly and oil companies connive with each other and so the government must have the right and the power to check on them. It should not be like the situation now where the government has to kneel or the President has to talk to oil companies for them to bring down prices,” Escudero said.

Speaker Prospero Nograles said Congress would look at the possibility of imposing a windfall tax.

“We join the senators’ call for oil companies to further reduce their selling prices,” he said.

Oil firms uncommitted

But oil companies have remained uncommitted on the prospects of another price rollback.

Shell companies in the Philippines country chairman Edgar Chua said most firms adopt a wait-and-see attitude on implementing a price rollback.

Both major and new oil players said that the situation remains fluid, especially with the threat of a one- to five-percent import tariff.

Oil firms claimed that the ruling on the tariff on imported crude and refined petroleum products is flawed.

Chua said that regulators forget to factor in the foreign exchange component in the trigger price for the level of the import oil tariff.

Based on DOE circular 2008-01-0001, the trigger point or price for a one-percent tariff is $91.70 per barrel for Dubai crude and $113 for MOPS diesel.

The trigger price for a two-percent tariff is $86.50 per barrel of Dubai crude and $100 for MOPS diesel.

For a zero-tariff level, the trigger point is $103.50 per barrel for Dubai crude and $117 per barrel for diesel.

“What they forgot to includeis the foreign exchange component,” Chua said at the sidelines of the Management Association of the Philippines (MAP) International CEO conference yesterday.

The recommendation for an amendment of Executive Order 691 must come from the DOE, which must be forwarded to the Department of Finance (DOF) and the National Economic and Development Authority.

The DOF estimated that the one-percent tariff is roughly equivalent to P0.23 to P0.35 per liter for gasoline, and P0.46 per liter for diesel.

The average price of Dubai crude for the month of September is $95.90 while the peso in the same period averaged P46.17.

For the month of October covering the period Oct. 1 to 6, Dubai price fell to $84.42 while the peso depreciated further to P47.19.

On Oct. 6 alone, Dubai weakened to $79.45 but the peso slumped further to P47.40.

Chua admitted that their sales were lower by six to 10 percent compared to the same period last year.

It was Pilipinas Shell Petroleum Corp. that categorically admitted that they would lower the pump price in selected stations located near stations of new oil players.

Unioil Petroleum lowered prices of its petroleum products by P3 per liter last month at a time when the rest of the field reduced prices by P1 per liter. People flocked to the Unioil stations but supply quickly ran dry.

There are speculations that prices could go down to $50 per barrel due to slumping demand brought about by the global financial crisis and economic slowdown.

‘Implement substantial rollback’

The Bagong Alyansang Makabayan (Bayan) also demanded that local oil companies immediately implement “substantial rollback” in pump prices, saying that not doing so is “glaring proof” that the Oil Deregulation Law has failed.

The group said the drastic drop in oil prices worldwide “undoubtedly” warrants a pump price reduction of at least P7 per liter for diesel, P2.30 for gasoline, and P8 for kerosene.

Based on the study by Bayan, oil companies should have already “implemented a major reduction in pump prices” since Sept. 26.

It pointed out the steadily declining prices of Dubai crude as its benchmark for computing the price rollback and even factored in the weakening Philippine peso.

“Even if the peso continues to weaken, and even if oil tariffs are restored, a substantial rollback can still take place. Having no rollback at all is totally unacceptable for consumers. That would be a gross injustice,” said Renato Reyes Jr., Bayan secretary-general.

Reyes said local oil firms should all the more implement a price cut since world oil prices are dipping below the $88 per barrel mark.

“The trend in oil prices is that of a steady decline. The immediate P7 rollback may even be a conservative estimate in the light of even bigger drops in world oil prices. The previous oil price hikes were pushed by speculation. When the reality of the global economic slowdown set in, oil prices have been pushed down,” he said.

Reyes criticized the DOE for “refusing to acknowledge and failing to understand that even if world oil prices go down, the power to lower pump prices of oil lies with the ‘cartel’ in the local oil industry.”

Bayan insisted that the Oil Deregulation Law must be immediately scrapped.

“Government appears to be able to compute a price rollback yet (it) is powerless in the face of the deregulation law. Then why does government continue to uphold such a law?” Reyes said.

“It’s not about who can give the best sound bite. It’s about changing the policy. All your sound bites on the rollback are useless if you end up defending the Oil Deregulation Law,” he added.

– With Katherine Adraneda, Jess Diaz

Jose Katigbak, STAR Washington bureau
Philippine Star

WASHINGTON – It’s not often that good news from the Philippines makes a prominent splash in a major US daily, but a story on the billions of dollars saved by the country because of its use of geothermal power as an indigenous energy source was on the front page of the Washington Post on Saturday.

Ever since the early 1970s when then President Ferdinand Marcos created a major government program to find, develop and generate electricity from hot rocks deep in the ground, successive governments have championed this form of alternative energy despite revolutions and widespread corruption, said the report from Ormoc written by Post correspondent Blain Harden.

In installed geothermal power capacity, the Philippines ranks No. 2 in the world, narrowly trailing the United States, which has far more geothermal potential, far more engineering talent and far greater demand for clean sustainable power, it said.

“But unlike in the Philippines, government policy in the United States has been inconsistent,” the report said.

Geothermal power now accounts for about 28 percent of the electricity generated in the Philippines.

With 90 million people, about 40 percent of whom live on less than $2 a day, the Philippines has become the world’s largest consumer of electricity from geothermal sources and billions of dollars have been saved because of reduced need for imported oil and coal, said the report entitled “Filipinos draw power from buried heat.”

“The Philippines would be in hugely worse shape without geothermal as an indigenous energy source,” Roland Horne, a Stanford University expert on geothermal power who has visited the Philippines more than 20 times, told the Washington Post.

The daily said the showcase of the country’s long-term commitment to this alternative source of energy was in Leyte, where a government-created company, now privatized, has carefully transformed a vast geothermal field into the linchpin of the country’s electricity grid.

It quoted experts as saying that Leyte, if it continues to be well managed, should produce electricity for centuries.

The United States has the world’s largest geothermal resource, the Geysers, 72 miles north of San Francisco, but it has not been nearly as well managed as Leyte, according to Horne and other experts.

Ma. Elisa P. Osorio
Philippine Star

Local industries have warned that a government audit of oil firms could send the wrong signal to potential investors that the state is intervening in deregulated industries.

Jesus L. Arranza, president of the Federation of Philippine Industries (FPI), has urged the Commission on Audit (COA) to reconsider its plan to check the books of the oil companies.

“The oil industry is already deregulated so having the oil players audited by the COA could be construed as a state intervention,” he said.

Instead, Arranza said if the government must look into the financial books of the oil firms, it can hire an independent auditing firm

“The same result can be achieved by asking independent auditors to conduct the audit, with the Departments of Energy, Justice and other concerned government agencies sitting as observers,” Arranza said.

He explained that looking into the books of oil firms may be justified because this would safeguard the welfare of Filipino consumers against possible abuses. However, Arranza said the COA is not the appropriate party to conduct the audit.

He said this is because there is a danger that this would be made as a precedent for the state to encroach on more privately-held businesses, and consequently discourage businessmen, especially the foreign investors, to invest the needed capital to make the various Philippine industries and sectors more vibrant.

Las August, President Arroyo ordered the Department of Energy (DOE) and COA to conduct an “intensive audit” on oil and power.

Under the Downstream Oil Industry Deregulation of 1998, both the executive and legislative department have the power to direct the DOE to investigate and report the facts relating to any alleged violation of RA 8479 by any person or corporation.

The government said the DOE can use its powers under the law to thwart possible pricing abuses by the oil companies.

Delon Porcalla
Philippine Star

The Department of Energy (DOE) will not support proposals to repeal the Oil Deregulation Law, largely blamed for the unabated oil price increases in the country, Energy Secretary Angelo Reyes told the House committee on appropriations scrutinizing his department’s P1 billion proposed budget for 2009.

“I would like to have that power, but the consequences are not desirable. I know the implications,” Reyes, former military chief and defense secretary, said.

He acknowledged that the DOE has “no power” over oil companies such as the so-called “Big 3” – Shell, Petron, and Chevron (formerly Caltex) – to control their prices.

“The most we can do is to monitor, although we have the Department of Justice-DOE task force,” he told Cagayan de Oro Rep. Rufus Rodriguez, who asked whether the government can go after oil firms colluding with one another “to cartelize” the prices of petroleum products.

Reyes cited the case of the defunct Oil Price Stabilization Fund (OPSF), which was dissolved in the late 1990s after it incurred liquidity problems.

“Just like the OPSF, it (regulated law) went bankrupt. There was no fund. Under a regulated industry, we have to put up a fund. But the question is, can we sustain it? In Indonesia, India, and other countries, they abandoned the idea,” he said.

“The logic of a regulated market is that if the prices are high, you set the gear, then you should shoulder it. The logic of oil deregulation law is to have more competition. We now have small players. We don’t want only one dominant power to control the market,” he said.

At the same time, he shot down insinuations that the country’s biggest oil companies have been in collusion to set a “cartelized pricing scheme,” saying the competition lies not in the prices, but in their services, which vary.

The DOE chief was likewise non-committal when asked by Parañaque Rep. Roilo Golez whether a price rollback is in the offing, following the significant reduction of the prices of crude oil in the world market.

“Under the regime of deregulation, nobody can. I’m not in a position to say that. The prices are determined by the law on demand and supply. I can’t paint a rosy picture if there is a problem,” he said.

“It’s easy to say that, and people will applaud, poging pogi tayo diyan. But they (oil firms) are the ones making the announcement. That’s the role of a cabinet member, pag good news sila (oil firms) ang nag-a-announce, pag bad news kami,” he added.

A House official earlier revealed that contrary to oil firms’ excuses, even small players in the industry are also making a killing in terms of profits, as shown in their financial statements.

Cebu Rep. Eduardo Gullas cited the financial reports filed by Total Philippines Corp., Seaoil Philippines Inc., the Mindanao-based Phoenix Petroleum Philippines Inc., Unioil Petroleum Philippines Inc. and Filpride Energy Corp. before the Securities and Exchange Commission (SEC).

Profits of these independent players — aside from the popular three Pilipinas Shell, Petron Corp. and Chevron Philippines — have increased “considerably,” compared to their previous profits, long before the series of oil price hikes hit the world and local markets.

In a statement, Gullas, head of the 12-man House contingent to the powerful bicameral body Commission on Appointments, said that Total reported a “net profit of P324.79 million in 2007 — a huge reversal from the P290.14 net loss the firm posted in 2006.”

Seaoil told the SEC that it obtained a “net profit of P123.4 million in 2007” or 235 percent higher than the P36.84 million that the firm posted in 2006.”

Phoenix, whose operations are limited to Mindanao, declared a “net income of P122.36 million in 2007,” up by 65 percent from the P74.26 million it posted in 2006.

Unioil, which realized a net income of P35.79 million in 2007, reported 78 percent increase from the P20.09 million gains it reported in 2006.

Filpride Energy Corp. reported a 259-percent increase in net profit, from P1.44 million in 2006 to P5.17 million in 2007, said Gullas.

Of all the small independent players, the administration lawmaker pointed out that “only Eastern Petroleum Corp. reported a slight net profit decline, from P8.57 million in 2006 to P7.18 million in 2007.”

Euan Paulo C. Añonuevo
Manila Times

Oil firms are expected to reduce rates at the pumps, even as world crude prices recovered because of a hurricane threatening the US Gulf Coast.

In separate announcements Friday, Petron Corp., Pilipinas Shell Petroleum Corp., Eastern Petroleum Corp., Seaoil Philippines Inc. and Unioil Petroleum Philippines Inc. said that they would slash diesel, gasoline and kerosene prices by P1 per liter.

Unioil implemented its price cut at 10 p.m. Friday, while the other oil firms’ are to roll back rates at 12:01 a.m. today.

The cut is the fifth rollback of fuel prices this month, bringing down the cost of diesel and kerosene by P3.50 per liter and gasoline by P5.50 per liter.

Raffy Ledesma, Petron strategic communications manager, said they reduced prices to “reflect the continued softening in international oil prices.”

The prices of imported diesel and gasoline have gone down to $135.37 and $115.41 per barrel from $168.01 and $135.27 per barrel, respectively.

Energy Secretary Angelo Reyes earlier said he expected oil firms to implement further pump adjustments in light of the lower average price of oil in August.

But he declined to say how much fuel prices should be adjusted, as “market forces” will ultimately determine the rates.

World prices recover

Oil prices rebounded in Asian trading on Friday as traders kept a close watch on a storm moving toward the Gulf of Mexico and key oil installations, analysts said.

In afternoon trade, New York’s main contract, light sweet crude for delivery in October, rose $1.51 to $117.10 a barrel after a drop of $2.56 in New York on Thursday.

Brent North Sea crude for October gained $1.28 to $115.45 a barrel. The contract shed $2.05 Thursday in London.

“Still we have to worry about the hurricane’s effect on this market,” said Ken Hasegawa, manager of the energy desk at Newedge Japan brokerage in Tokyo.

He said the storm should support prices for up to three more days.

About a quarter of US crude oil installations are located in the Gulf of Mexico.

Tropical Storm Gustav was threatening to regain hurricane strength before entering the Gulf over the weekend. It was expected to make landfall in Louisiana and Texas on Monday, according to the US National Hurricane Center.

British oil group BP and US rivals ConocoPhillips and Shell said they were evacuating workers from their energy installations in the Gulf of Mexico ahead of the storm.

The threat of Gustav raised grim memories of the 2005 hurricanes Katrina and Rita that damaged or destroyed about 165 of about 4,000 oil platforms in the Gulf.

Mike Fitzpatrick at MF Global said that “even if the damage from the approaching storm is fractional it could still be significant” because of limited capacity.

“The environment of sparse capacity means that every barrel of oil lost to the marketplace will be felt, particularly as the Northern hemisphere’s winter is just around the corner,” he said.

Hasegawa said the market could also get support from the closing of short positions ahead of the Labor Day holiday on Monday when US trading is closed.

World oil prices have sunk from record highs above $147 a barrel in early July after surging from $100 at the start of the year.

Analysts say the struggling economy in the United States, the world’s biggest energy consumer, has curbed demand for oil.

– With AFP

Dan Mariano
Manila Times

Get ready to start hearing more and more of “demand destruction.” It is a phrase that market analysts bandy about as a shortcut for the declining demand for oil and its byproducts.

Last Friday, for instance, figures from the US energy department showed that Americans consumed 2.4 percent less fuel over the past four weeks than they did over the same period in 2007. According to industry experts, it showed a significant shift by the world’s largest energy consumer. Additional data further indicated a bigger-than-expected rise in US gasoline supplies, a gauge that motorists are cutting back.

As a result, the price of the oil that the US imports has dropped. From a high of $147 earlier this month to $124.44 last Wednesday, the barrel-price of petroleum decreased by about 15 percent.

A similar trend has developed in our part of the world where declining demand has led to a buildup of fuel inventories. Unfortunately, however, no significant relief is in sight for harassed consumers of gasoline, diesel and other oil products—especially in the Philippines. Pump prices, whether here or in the US, are still stratospherically high.

True, the oil companies shaved P1.50 per liter from their diesel products last week—two days after they raised their price for the same product by P3. But if Malacañang is to be believed, it was not due to market forces but to President Arroyo’s intervention.

Of course, the government is in no position to set fuel prices, save for what Energy Secretary Angelo Reyes—half-jokingly, it seemed—called the President’s “persuasive powers.” With the passage of Republic Act 8479, also known as the Downstream Oil Industry Deregulation Act of 1998, the Philippine state has surrendered what power it had to shield consumers from rising oil prices.

RA 8479’s proponents had promised that competition among the oil companies would drive down fuel prices—and improve customer service besides. Never happened.

Industry collusion

Instead, Filipino consumers have become powerless as the oil companies—in far too evident collusion—relentlessly raised fuel prices, and raked in mind-boggling profits in the process.

As one result, the clamor for a return to oil-industry regulation, which used to be raised only by leftists, has been joined by some lawmakers. One of them, Ca­gayan de Oro Rep. Rufus Rod­riguez filed a bill that seeks to repeal RA 8479 and re-establish the Oil Price Stabiliza­tion Fund (OPSF).

In House Bill 4262, the freshman legislator said that RA 8479, instead of fostering a competitive market, has only strengthened the oil cartel in the country and brought up oil prices. He added that the dominant companies still dictate the price of oil because even new industry players get their supply from the oil majors.

When RA 8479 is out of the way, the government would be able to set fuel prices. Moreover, Rodriguez said, reviving the OPSF “would cushion the additional cost of crude oil and petroleum products’ importation due to fluctuations in the foreign exchange rates.”

Prior to RA 8479, fuel prices were set by the Energy Regulatory Board. The oil companies were reimbursed the difference between ERB-set prices and the actual cost of fuel in the regional market through drawdowns from the OPSF.

Oil companies complained that regulation curtailed their business operations. Nevertheless, the system served to stabilize fuel prices.

“The continuing increase in the price of oil adds misery to the people as it translates to lesser purchasing power on the part of the consumers,” Rod­riguez said. “We need to regulate the oil industry and return the OPSF to cushion the rising costs of crude oil.”

Where would the government get the money to sustain the OPSF?

Well, the Palace itself has been distributing handouts sourced from what it calls Katas ng E-VAT. Why can’t the government instead use the “windfall collections” from the expanded value-added tax imposed on oil to support the OPSF?

That way, everybody benefits—not just certain sectors, who do not appreciate Mrs. Arroyo’s multibillion-peso balato anyway, going by recent survey results.

Raking it in

Another congressman has revealed the megaprofits that at least two of the country’s biggest oil companies have been raking in—thanks to RA 8479.

According to Cebu Rep. Eduar­do Gullas, Pilipinas Shell and the partly state-owned Petron Corporation have netted P70 billion in profits during the first 10 years of deregulation.

According to the senior lawmaker, Shell posted P33.59 billion in cumulative net profits from 1998 to the first quarter of 2008. Petron cleared P35.18 billion in profits over the same period, he said. Gullas cited the regulatory filings of the two oil firms as the source of his figures.

“The Downstream Oil Industry Deregulation Law has definitely been a boon to the two oil refiners and other [industry] players,” Gullas said. “There is also no question that as a result of soaring world oil prices, industry players are enjoying enormous pricing power that has enabled them to pump up their profits.”

He warned: “Consumers are now extremely vulnerable to potential pricing abuses.”

Oil companies have raised diesel and kerosene prices 20 times, by a total of around P22 to P24 a liter so far this year. They have also raised gasoline prices 19 times, by a total of about P19 a liter.

dansoy26@yahoo.com

Donnabelle Gatdula
Philippine Star

As world crude prices soften, a whopping P3 per liter increase in diesel prices is being implemented this weekend, the highest increase so far in the fuel used by most mass transporation vehicles.

The oil firms decided to carry out what they described as a “one-time, big-time” increase even as they came under fire from consumer groups and militant organizations for allegedly taking advantage of the rising global crude costs to overcharge consumers.

After rolling back gasoline prices by P1 per liter last week, the oil firms are also raising the price again by P1 per liter.

With the latest increase, the pump prices of diesel and gasoline now approach the P60 and P63 per liter mark, respectively.

Diesel price will range from P57.48 to P59.47 per liter; unleaded gasoline, P59.10 to P62.28 per liter; and kerosene, P59.41 to P63.30 per liter.

As of late afternoon yesterday, small oil players Seaoil Philippines, Eastern Petroleum, Unioil Petroleum and Flying V had raised their diesel prices by P3.

The four oil firms will also increase the price of their kerosene products by P1.50 per liter.

Earlier, the oil firms indicated their intention to implement a “one time big time” price adjustment, purportedly to “end the agony” of the transport sector.

Prior to the P3 per liter adjustment, oil firms claimed that they had a P5 per liter under-recovery for diesel for the month of June.

But with the current oil price trend, sources said the under-recovery for diesel as of July already amounted to P2 to P3 per liter.

As of yesterday, unleaded gasoline in Mean of Platts Singapore (MOPS), the pricing benchmark used by oil importers, averaged $142.91 per barrel from its June average of $140.30 per barrel.

MOPS for diesel also soared to $175.73 per barrel from the June average of $169.36 per barrel.

Dubai crude, the price gauge of oil refiners, also went up to $137.02 per barrel from $127.82 per barrel.

However, liquefied petroleum gas or cooking gas remained steady at P633 to P689.50 per 11-kg tank.

Euan Paulo C. Añonuevo
Manila Times

The government has organized a taskforce that will monitor oil firms’ price adjustments in light of the soaring price of crude in the world market.

In a statement, the Department of Energy said the government formed the task force that also includes the Department of Justice “to take a very active role” in assessing and evaluating all factors to ensure fair and reasonable pricing of petroleum products as mandated under Republic Act No. 8479 or the Downstream Oil Deregulation Law.

Under a memorandum of agreement signed by the two government agencies on Monday, the task force shall investigate “any person, any threatened, imminent or actual cartelization or predatory pricing, the commission of any violation under Section 12 of the Act or any unreasonable rise in the price of a petroleum product.”

Undersecretaries from both departments will serve as co-chairmen of the task force.

In an earlier study, the University of Asia and the Pacific and the SyCip Gorres Velayo and Co. accounting firm cleared oil firms of any irregularities in previous price increases at the pump. The Energy department commissioned the study last year, the results of which were released in March.

Since the start of the year, local oil companies have jacked up prices 19 times to recover their “losses” after crude soared to record levels.

A number of groups have scored the increases saying that current fuel prices, which are almost double last year’s, are more than what they should be.

Energy Secretary Angelo Reyes earlier said the department will keep a close eye on fuel adjustments, including rollbacks, to ensure that market forces are solely responsible for such moves.

“We will see to it that oil companies do not unreasonably price their products,” he said.

Local retailers surprised motorists last week when they announced a price rollback within days of oil hitting a fresh record high in the world market.

Flying V, a member of the Independent Philippine Petroleum Companies Association (IPPCA), triggered the industry-wide rollback in gasoline prices. The company’s move caught fellow IPPCA members as well as the Big Three—Petron, Shell and Caltex—by surprise, forcing many of them to respond with their own price reductions.

The industry’s price adjustment last week was a turnaround from the past practice of immediately raising pump prices whenever crude hits a new record high in the world market.

Before the rollback, industry players had claimed they still had about P6 in under-recoveries. In announcing its reduction, Flying V however said that it managed to earn modest margins on its sales, thus its decision to cut prices.