Department of Energy says P2/liter oil price hike reasonable

MANILA, Philippines - The Department of Energy (DOE) defended yesterday the oil firms’ recent P2 per liter price hike as “reasonable.”

Energy Secretary Jose Rene Almendras also made the assurance that the country has enough fuel stocks.

“It is within the computed values,” Almendras said noting that computations showed that the oil price increase implemented by oil the companies was well within the DOE’s data.

It was noted that the price of gasoline used as gauge by oil firms increased to $94.70 per barrel from $91.30 the previous week. This was equivalent to a P1.51 per liter increase in local pump prices. Oil companies had adjusted their gasoline prices by P1.50 per liter.

For diesel, the DOE said it increased to $100.10 per barrel from the other week’s $94.90 which was equivalent to a P2.09 per liter adjustment on the local front. The petroleum companies jacked up the price of their diesel products by P2 per liter.

These prices, the DOE said, already took into account the foreign exchange impact from P42.73 to a dollar to P43.44, a drop of 71 centavos.

Almendras was also quick to point out that the DOE has no business justifying oil prices as the country’s oil industry is deregulated and governed by market forces.

“We’re not in a position to support or not to support the oil price hike. Our mandate is to determine whether they are within reason. Because if they are not within reason, we’re supposed to activate the DOE-DOJ Task Force. That’s what we are supposed to do. So when we see that the increase cannot be justified based on our own computation, then it is incumbent on us to take that action and we will take that action,” he said.

He said there is no need to activate the task force as the price movements are “within the computed values”.

The energy chief also could not say if there would be more price increases in the coming days.

But he said prices are relatively stable the first few days of the week.

Analysts said crude oil tumbled to a two-week low on speculation Europe’s deepening debt crisis and steps to cool Asia ’s economic growth will reduce demand.

Oil slid three percent as European ministers gathered in Brussels to discuss aid to Ireland ’s banks. The Bank of Korea raised interest rates for the second time this year and the Chinese government will take steps to control rising prices. The drop accelerated after US wholesale costs rose less than forecast in October.

“There are concerns about what the European debt crisis will mean for the economy and energy demand,” said Chris Barber, a senior analyst at Energy Security Analysis Inc. in Wakefield , Massachusetts . “There are similar concerns about what the Asian steps will mean for demand.”

Crude oil for December delivery fell $2.52 to $82.34 a barrel on the New York Mercantile Exchange, the lowest settlement price since Oct. 29.