59¢ oil price hike looms

Private sector group Consumer and Oil Price Watch projected yesterday an increase of 59 centavos per liter in pump prices this month as a result of the weakening of the peso against the dollar.

The projection coincided with Malacañang’s announcement that the three percent tariff on imported crude oil and finished petroleum products will only be suspended once fuel prices are sure to increase again. Oil companies, on the other hand, have made it known that an increase could be held back if the government suspends the tariff.

Consumer and Oil Price Watch chairman Raul Concepcion said the projected increase this month could be tempered by as much as 30 centavos if President Estrada suspends the three percent tax.

Concepcion explained that the primary reason for the November increase is the depreciation of the peso and not the increase in world crude prices.

"The peso depreciated by 2.54 against the US dollar in September. On the other hand, the average cost of Dubai crude only slightly increased from $30.37 in September to $30.50 last October," Concepcion said.

Executive Secretary Ro-naldo Zamora is drafting an executive order that will start the process of suspending the three percent oil tax.

"This includes the public hearings to be conducted by the Tariff Commission. Perhaps, within this week, we can do it already. Of course, we still have to wait for the oil companies to act," Zamora said.

He admitted that the government cannot precipitate any action to suspend the tax since there are no clear indications yet how prices in the world market will behave.

"We don’t want to lose revenues just like that. But if it is clear to us that the oil companies will indeed raise prices, then we will suspend the tax," Zamora said.

He pointed out that the government stands to lose some P6 billion n collection revenue if the suspension is imposed.

Meanwhile, Petron Corp. chairman Jose Syjuco said the oil company is studying options in view of the socio-political situation and the volatility of the foreign exchange.

"We want to know the initiatives of the government which would hopefully mitigate price increases this month," Syjuco said.

Petron earlier declared it was not increasing prices this month. Forty percent of the company’s equity is controlled by the national government.

Petron’s market rival Pilipinas Shell Petroleum Corp. said it could hold back any increase in the next few weeks if the government suspends the three percent oil tariff.

Shell was earlier looking at a P1 to P1.10 per liter increase in pump prices.

Caltex Phils. Inc., the other member of the industry’s Big 3, could not be reached for comment.