DOE to oil firms: Explain latest round of price hikes

President Arroyo ordered the Department of Energy (DOE) yesterday to ask oil companies to explain the latest increase in pump prices of oil products and liquefied petroleum gas (LPG) despite the decline of crude prices in the world market.

"We must ensure that there is a clear justification for such increases in accord with the situation in the world market," Presidential Spokesman Ignacio Bunye said.

Bunye said the latest increase in pump prices only strengthened the administration’s resolve to search for alternative energy sources.

"Meantime, the series of oil price hikes should serve as a constant reminder to all sectors – public and private – of the need to conserve our precious fuel," he said.

Two of the country’s major oil players, Caltex Philippines and Petron, increased their pump prices by 50 centavos per liter on Saturday.

Newcomer Flying V also increased the prices of its petroleum products by 50 centavos per liter, and P5.50 for every 11-kilo LPG cylinder.

The three oil firms said the latest price adjustments already included the impact of the two-percent hike in the expanded value-added tax (EVAT) rate from 10 percent to 12 percent.

The government earlier tried to persuade oil firms to hold off any upward price adjustments since the implementation of the additional EVAT last Feb. 1.

But officials of the three oil firms argued the increase was mainly brought about by the continued rise in crude costs in the international market.

Bunye said the three oil firms must justify before the DOE and explain the spate of increases in their fuel prices despite the apparent downfall of oil demand in the world market.

Bunye noted that most countries, including the United States, are now launching efforts to "divorce their addiction" to fossil fuel by looking for alternative energy sources.

"For its part, Congress would do well to act soonest on pending energy bills including the one providing incentives for the production of ethanol and biodiesel," he pointed out.

Dubai crude, the benchmark for local refiners, went up from an average of $58.44 per barrel last January to $59.85 this month. It averaged only $53.20 last December and $51.39 in November.

The average Mean of Platts Singapore (MOPS), the main barometer for oil importers, on the other hand, went down slightly to $65.51 per barrel for unleaded gasoline from $66.79 last month.

The figures are still higher from $60.87 and $61.01 in November 2005 and December 2005, respectively.

MOPS diesel prices likewise went down to $70.26 per barrel this month from $73.14 in January. However, prices were higher than the $64.84 cost in November 2005 and $67.03 last December.

LPG prices, meanwhile, averaged $625.5 per metric ton this month, a huge increase from $582 last month and $538 in December 2005.

Inclusive of the EVAT, local petroleum prices currently range from P36.31 to P38.85 per liter for unleaded gasoline; P30.85 to P33 for diesel; P33.4 to P34.72 for kerosene; and P496.21 to P540 for a standard 11-kilo LPG tank.