Fuel prices hiked anew; LPG cost slashed

MANILA, Philippines – For the fifth time in four weeks, oil firms raised their pump prices by 50 centavos per liter due to the significant rise in world crude costs.

Pilipinas Shell Petroleum Corp., Petron Corp., Total Philippines Corp. and Unioil Petroleum Inc. made the price adjustment on fuel effective yesterday but at the same time, Shell and Total reduced the prices of their liquefied petroleum gas (LPG) products by 50 centavos per kilo.

By April 1 though, oil companies will reflect in pump prices the one-percent cut on tariff of imported crude products as prescribed by the Department of Energy (DOE).

Based on DOE data as of March 25, the month-to-date average price of Asian Dubai crude increased by about $7 per barrel over the February average.

The gasoline and diesel averages posted higher by about $5 per barrel and $15 per barrel, respectively, over the previous month’s levels.

International oil prices remained volatile generally in an upward trend, with new peak levels of Dubai crude and diesel recorded early last week.

By the end of the week, prices were traced on a receding trend in view of concerns about the slowing US economy.

The International Energy Agency (IEA) earlier cited the short-term impact of dollar weakness, commodity prices, rising production and exploration costs as factors influencing oil prices.

Some analysts believe that the recovery of the US dollar has simply put downward pressure on oil prices over the week, and pricing could continue to pull back if the US dollar manifests further decline.

A weaker US currency encourages demand for dollar-priced oil because it becomes cheaper for buyers using stronger currencies, while investors also seek to guard against risks to inflation. Investors are also extremely cautious in their outlook for the US economy, which has been roiled by the subprime mortgage sector’s meltdown.

Other analysts believe the world’s biggest economy is already in a recession.

Meanwhile, OPEC president Chakib Khelil expected oil prices to remain within a range of $80-$110 for the rest of the year, although prices might weaken slightly during the second quarter from current levels because of an expected fall in demand by about 1.4 million barrel per day.

Khelil blamed high oil prices on the US dollar against the major currencies, and speculation in energy futures markets rather than on a shortage of supply.

After its March 5 meeting, OPEC is scheduled to meet again this September.