Bu-lat-lat (boo-lat-lat) verb: to search, probe, investigate, inquire; to unearth facts
Volume 2, Number 34 September 29 - October 5, 2002 Quezon City, Philippines
OPH in October: Oil Price Hocus-Pocus
independent computation of oil-related data shows cumulative losses of oil
companies in 2001 and the first nine months of 2002 amounting to P2.34 ($0.0446)
per liter. However, there is evidence to prove overpricing in 2000 amounting to
P2.64 ($0.0504) per liter. There is factual basis therefore in calling for a
rollback in oil prices amounting to P0.30 ($0.0057) per liter.
DANILO ARAÑA ARAO
public’s mind is already being conditioned to an impending oil price hike
anytime in October by as much as 53 centavos per liter ($0.0101, based on an
exchange rate of P52.40 per US dollar). An independent computation based on the
given data, however, shows that there is factual basis to call for a rollback
amounting to 30 centavos ($0.0057) per liter.
Raul Concepcion, who also chairs the Consumer and Oil Price Watch, claims that
the increase is “due to the increasing tension in the Middle East brought
about by Iraq’s decision to reject any new United Nations resolutions on
to data from the Department of Energy (DoE), Dubai crude prices are pegged at
$26.61 per barrel this month compared to $25.24 in August. The foreign exchange
rate, on the other hand, stands at P52.07 per U.S. dollar in September compared
to P51.82 last month.
independent monitoring of price movement of petroleum products since January
2000 shows that on the average, oil prices increased by P4.01 ($0.0765) per
the P1.46-rollback ($0.0279) per liter in oil prices in 2001 is substantially
negated by the increases in 2000 and the first nine months of 2002 amounting to
P3.87 ($0.0738) per liter and P1.60 ($0.0305) per liter, respectively. (See Table)
companies claim that these price movements are mainly based on fluctuations in
world crude prices and the peso-dollar exchange rate.
to DoE data, Dubai crude prices in 2000 were pegged at $26.14 per barrel. By
2001, Dubai crude prices fell to $22.81 per barrel, and then slightly increased
to $23.30 per barrel for the first nine months of 2002.
peso-dollar exchange rate, on the other hand, stood at P44.71 in 2000, and was
devalued to P51 and P51.06 in 2001 and January to September 2002, respectively.
on the data on Dubai crude prices and peso-dollar exchange rate, oil companies
overpriced their products by P2.64 ($0.0504) per liter in 2000 based on the
industry rule of thumb.
the year 2000, the DoE-computed rule of thumb states that there should be a
P0.35 centavos per liter oil price hike (or rollback) for every $1 increase (or
decrease) in Dubai crude prices. A one-peso fluctuation in the peso per U.S.
dollar exchange rate, on the other hand, results in a 20-centavo rollback (in
the event of peso appreciation) or increase (in the event of peso depreciation).
For the years 2001 and 2002, Bulatlat.com computes the rule of thumb at 42
centavos for every $1 increase or decrease in Dubai crude prices, and 19
centavos for every P1 appreciation or depreciation of the exchange rate.
overpricing of petroleum products two years ago negates the underrecoveries or
losses of oil companies as a result of fluctuations in Dubai crude prices and
the exchange rate. Data show that these losses only amount to P0.19 ($0.0036)
per liter in 2001 and P2.15 ($0.0410) for the first nine months of 2002. (See Table)
This means that the cumulative losses since 2001 amounting to P2.34 ($0.0446) per liter should be analyzed in the context of the P2.64-overpricing ($0.0504) per liter in 2000. Such is the factual basis in calling for a rollback in oil prices amounting to P0.30 ($0.0057) per liter. Bulatlat.com