Caltex mulls 75¢ oil price increase

Another oil price hike is in the offing.

Caltex Philippines Inc. is looking at a 70- to 75-centavo per liter increase on local prices of petroleum products this month while the new players have their sights trained on a P1 increase.

Pilipinas Shell Petroleum Corp. is also planning a similar increase, possibly early next month, according to Shell president Oscar Reyes.

Caltex country chairman Nicholas Florio in a telephone interview with The STAR cited the depressed local currency against the US dollar, with Dubai crude averaging at $31 a barrel, as well as unenforced legislation as the reasons for the new adjustment.

"But we are still sitting tight and waiting ... for developments in the market," Florio said, referring to the real implementation of the three percent import tariff on crude oil and the proposed legislation suspending specific taxes on several petroleum products, aside from the prices of world crude and the foreign exchange.

The oil companies have been complaining that Executive Order 314, signed Nov. 8 suspending the three percent tariff, remains unimplemented. The Bureau of Customs, the collecting agency for import duties, refused to recognize the EO unless they receive a memorandum from the Department of Finance.

The suspension will result in an estimated 30-centavo per liter reduction in the planned price adjustment this month, or reducing this to just a 40-centavo per liter mark-up for November.

However, the new players are talking of a P1 per liter adjustment since they buy imported refined products which are more expensive than the crude oil purchased by Petron Corp., Pilipinas Shell Petroleum Corp. and Caltex, the country’s oil refiners.

Unioil Petroleum Corp., Total Petroleum Philippines Corp., Eastern Petroleum Corp., and Flying V Corp. all agreed that they need a price increase of P1 per liter if they are to stop their bleeding in the face of the weakened peso and high crude costs.

But oil companies welcomed the proposed legislation reducing the specific taxes of gasoline, diesel, bunker fuel oil, and kerosene. They estimated that if it is enforced within the month, it would result in a reduction of approximately 20 to 30 centavos per liter in their price adjustments for this month.

"If that happens within the month, we will assess our position again," Florio said.

Unioil manager for legal affairs Lawrence Luang said that the industry welcomes the legislative action on reducing the tariff and excise taxes which should result in a minuscule price adjustment, if any, for the month of November.