Caltex voices concern over amount of rollback of oil prices

Caltex Philippines Inc. has expressed concern over the reported price range for a rollback of prices of local petroleum products next month.

In a statement, Caltex said that the price range is only based on month-on-month factors of Dubai crude and the peso value, and does not take into account other factors such as the socio-political climate, high interest rates, and previous under recoveries.

"Caltex maintains that in any price adjustment, it takes more than Dubai crude price and the peso exchange rate as determining factors," Caltex corporate communications manager Marian J. Catedral said. "Other important factors such as the numerous deferrals of needed price adjustments that occurred over the past year; the significant increase in interest rates; and the devaluation of the peso, should all be considered in determining the true ‘under recovery’ in the oil industry for year 2000."

Last week, Energy Secretary Mario V. Tiaoqui said that oil companies could roll back prices from between P0.40 to P0.60 per liter due to the weakening of world crude oil prices and the stability of the peso to the dollar.

Catedral admitted that both major factors have shown considerable improvements in the previous months, but warned that it did not paint the entire picture.

"The current economic conditions and abnormally depressed price conditions over a great period also determine local pump price," she said.

The oil executive also pointed out that the phase-in of higher quality specifications for diesel and other fuel products under the Clean Air Act of 1999 or Republic Act 8749 must be taken into consideration in the planned rollback. In fact, Catedral claimed that the oil firm had already introduced higher quality fuels into the system without a corresponding price recovery.

The Caltex official said that they will continue to monitor price movements before making any price adjustments.

Earlier, Petron Corp., Pilipinas Shell Petroleum Corp., and Unioil Petroleum Corp. reacted to earlier statements by the energy department and consumer groups that local pump prices should be decreased by P1 per liter this January.

Tiaoqui had reduced this amount to between P0.40 to P0.60 late last week.

Representatives of the three firms said that they still have to study all factors before giving a definite statement regarding a rollback and the exact amount.

Aside from the points raised by Caltex, they reminded that the three-month suspension of the three-percent tariff on imported crude oil and refined petroleum products will be lifted January. The suspended tariff is equivalent to P0.30 per liter.

Other factors are the reported demand by gasoline dealers for an increase in their margins, and the meeting of the Organization of Petroleum Exporting Countries (OPEC) in January wherein a one-million barrels per day production cutback is expected to be announced.

The world price of crude oil has continued to drop to about $23 per barrel, way below OPEC’s desired range of $25 to $28 per barrel.

Dubai crude as of Dec. 28 was quoted at $19.42, Brent was at $22.54 per barrel, and WTI at $25.78.

Oil executives said that the best promise they can make at this time is that there would be no price increases in January. Should the OPEC decide for a huge production cutback, its impact will only be felt in February.