Probe of LPG ‘Shortage’ Should Start with ‘Big Four’ Firms

“For one, the de facto ‘price cap’ imposed by the DOE on 11-kg LPG tanks contradicts the spirit of deregulation, which is to allow the so-called market forces to determine the prices of oil products,” he added.

Padilla also noted that several LPG brands are now being sold at prices higher than P500 ($1.05).

Following are the prevailing dealers’ pick-up prices of 11-kg LPG tanks in Metro Manila as of last Jan. 21:

Prevailing Retail Prices of 11-kg LPG in Metro Manila as of January 21, 2009
Dealers’ Pick-Up Price

Source: Department of Energy

“If the DoE is serious with its threat to penalize profiteering LPG retailers, then it only needs to look at its own price monitoring and punish the guilty firms,” Padilla pointed out. “(But) how can the DoE penalize oil firms retailing LPG at more than P500 when they can conveniently argue, as they have done many times in the past, that they have simply considered supply, demand, competition, and other market factors in their pricing?”

Padilla also said the investigation into the supposed LPG shortage will face a brick wall if the House Committee on Energy refuses to recognize how the deregulation of the Philippines’ downstream oil industry has strengthened what he described as the “monopoly” existing in the LPG market.

Proponents of deregulation claim that the entry of the so-called “new players” has reduced the dominance of Petron, Shell, and Chevron – which are otherwise known as the “Big Three” – in the LPG market.

Padilla, however, stressed that almost 92 percent of the domestic LPG market is still lorded over by only four companies, despite the entry of “new players”.

Petron accounts for 37.8 percent of the Philippines’ LPG market – by Liquigaz (24.6 percent), Shell (20.5 percent), and Total (8.7 percent). In 2007, Petron acquired Chevron’s LPG retailing business, and now sells the “Caltex LPG” brand. Liquigaz is a local subsidiary of SHV Gas, the world’s largest LPG retailer, which is based in the Netherlands. Meanwhile, Total has a 15-percent stake in Shell through a joint venture.

“Any issue about ‘shortage’ should be adequately explained by these four companies,” Padilla said. “Any probe on lack of LPG must start on an investigation of these firms, which overwhelmingly control depots, terminals, and refilling stations and hold the widest network of dealers in the country. But will Representative Arroyo and Energy Secretary Angelo Reyes go after them or will they merely pin the blame on the small retailers such as the members of the LPG Marketers’ Association (LPGMA)?”

“But going after these big companies is tantamount to an admission that deregulation has failed, the same policy that Mrs. Gloria Macapagal-Arroyo has vehemently defended against all odds,” he added.

Padilla also said Filipino consumers will have no security in supply of LPG and other petroleum products so long as the downstream oil industry is deregulated.(Bulatlat.com)

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