This story
was taken from Bulatlat, the Philippines's alternative weekly
newsmagazine (www.bulatlat.com, www.bulatlat.net, www.bulatlat.org).
Vol. VII, No. 11, April 22-28, 2007
January to
March:
Despite Underpricing, Oil
Firms Still Owe the Public P4.40/Liter IBON estimates show
that in spite of recent oil price hikes, petroleum products in the country are
underpriced by P1.39 ($0.03 based on the average exchange rate of $1:P47.60 for
this year’s first quarter) per liter from January to March 2007. However, the
said amount is still not enough to offset the overpricing that oil companies
implemented in the past.
BY IBON FOUNDATION
Posted by Bulatlat IBON estimates show that in spite of recent
oil price hikes, petroleum products in the country are underpriced by P1.39
($0.03 based on the average exchange rate of $1:P47.60 for this year’s first
quarter) per liter from January to March 2007. However, the said amount is still
not enough to offset the overpricing that oil companies implemented in the past. In the first three months of the year, the
pump price of oil products has decreased by P1.17 per liter instead of
increasing by 22 centavos as warranted by the movement of the Dubai crude spot
price and the foreign exchange rate. From $51.69 per barrel in January, the spot
price of Dubai crude jumped to $58.19 in March (1-19 average only) while the
peso strengthened against the US dollar from P48.91 to 48.66 during the same
period. But a look at the annual overpricing or
underpricing of petroleum products from 2000 to 2007 (as of March) shows that
oil companies still owe the consumers around P4.40 per liter. The actual
cumulative increases during this period reached P18.08 per liter, P4.40 higher
than the ideal adjustment of P13.67. (See Table)
Summary of overpricing/(underpricing) of oil products To compute the overpricing, IBON used the
difference between the monthly averages of Dubai crude spot price and forex to
determine their impact on the pump price. In March, for instance, a dollar
adjustment in the Dubai crude price translates to a 34-centavo per liter change
in the pump price while a peso adjustment in the forex translates to a
42-centavo change. The tremendous domination that the
transnational corporations (TNCs) in the global oil industry wield allows them
to dictate and manipulate the prices of petroleum products. These same TNCs
control the biggest oil companies in the Philippines namely, Shell, Chevron,
Petron, and Total. The overpricing of oil products worsens the impact of
frequent oil price hikes on people’s livelihood, the viability of small
businesses, and the overall growth of the domestic economy. Deregulation, through Republic Act No. 8479
or the Downstream Oil Industry Deregulation Law of 1998, gives these TNCs more
room to pad the true cost of oil. Thus the repeal of RA 8479 must be one of the
top priorities of those seeking a seat in the new Congress. In its place, a
legislation that will effectively regulate the activities of all oil companies
in the downstream and upstream oil industry must be passed. Such law and other
important reforms shall pave the way for the eventual nationalization of the oil
industry which is the only long-term solution to high, volatile, and
unreasonable oil prices. Posted by Bulatlat © 2007 Bulatlat
■
Alipato Publications Permission is granted to reprint or redistribute this article, provided its author/s and Bulatlat are properly credited and notified.
2000 – 2007 (In peso per liter)
Year
Ideal Adjustment
Actual Adjustment
Overpricing/
(Under-pricing)
2000
0.95
3.83
2.88
2001
-1.14
-2.26
-1.12
2002
3.22
0.75
-2.48
2003
1.34
2.62
1.28
2004
2.54
5.65
3.11
2005
6.20
7.04
0.84
2006
0.34
1.62
1.28
2007 (Jan.–Mar. only)
0.22
-1.17
-1.39
Total
13.67
18.08
4.40
IBON estimates based on
DOE data