‘Big 3’ oil firms scrap diesel discount for jeeps, buses

With the increase in the minimum fare for jeepneys and non-airconditioned buses effective today, the country’s top three oil firms will also stop giving discounts on diesel products to transport groups.

Oil giants Petron Corp., Pilipinas Shell Petroleum Corp. and Caltex Philippines Inc. announced yesterday that they will no longer extend transport groups the P1 to P2 per liter discount on their diesel products starting today.

Jeepney groups have been granted a minimum fare increase of P1.50, while operators and drivers of non-airconditioned buses were given P2 increase in minimum fare.

Petron, the country’s largest oil refiner and partly owned by the government, was among the first oil firms to respond to the government’s call to dole out discounts to transport groups to alleviate the impact of rising fuel prices. It has offered discounts at 75 of its gasoline stations all over the country since September 2003.

The major oil players’ move came as the Department of Energy (DOE) called on them to reconsider their decision to pull out the diesel discount.

The DOE is trying to convince the oil companies to continue giving the discount until such time that the oil industry has fully recovered from the effect of rising global oil prices.

Energy Undersecretary J.V. Emmanuel de Dios said perhaps oil companies can still provide discounts to transport groups that buy petroleum products in bulk.

De Dios, however, gave cognizance to the sentiments aired by the oil firms.

"We understand that it is also not proper to always give dole-outs or subsidy. The oil firms also have underrecoveries to recoup," he said.

A number of independent oil players led by Seaoil, Eastern Petroleum Corp. and Flying V have announced early this week that they will automatically pull out the discount on their diesel products once the fare hike is implemented today.

Under a deregulated environment, competition is very stiff, compelling oil firms to catch up or match the other oil companies’ prices.

The DOE, on the other hand, is optimistic that oil prices in the global market will soften after the Organization of Petroleum Exporting Countries (OPEC) decided to increase its production by two million barrels in July and 2.5 million in August.

Energy Secretary Vincent Perez said OPEC’s move is likely to bring down the price of Dubai crude by $7 to $8 per barrel in the next few weeks.