Pump prices up anew this weekend

MANILA, Philippines – Petroleum players will implement another oil price hike this weekend, an oil company official said.

“We will definitely have an adjustment this weekend. But as to how much the increase will be, we don’t know yet. We are still waiting for the advice of our marketing department,” Glenn Yu, president of Seaoil Philippines Inc., said.

By Monday, the Department of Energy will bring down the tariff on imported fuel products to zero, which will have an impact of 50 centavos per liter on diesel products.

Oil firms are expected to recoup costs of P10 per liter. If oil firms will increase this weekend, it would be the fifth time they would adjust their prices.

And this means they will have to adjust their prices for another five weeks.

As of May 27 this year, average price of Asian Dubai crude is about $15 per barrel higher than the previous month average. Likewise, gasoline and diesel rose by about $12/bbl and $18/bbl, respectively, over the previous month’s levels.

Based on DOE monitoring, the oil prices were continuously posting daily record highs until last week when West Texas Intermediate (WTI), the US oil price benchmark, shot up to over $135 per barrel on May 21.

DOE noted that a day after, Dubai crude, gasoline and diesel rocketed by $5 to $7 a barrel.

Reports said the rally was fed in part by the US Energy Information Administration report of unexpected decline in US crude oil and gasoline inventories by 5.4 million barrels to 320.4 million barrels and by 800,000 barrels, to 209.4 million, respectively.

Most analysts had expected a build-up in both stocks. With gas and oil prices setting new records on a daily basis, many international analysts are beginning to wonder whether anything can stop prices from rising.

There are technical signals in the futures market, including price differences between near-term and longer-term contracts, that crude may soon fall. But with demand for oil growing in the developing world, and little end in sight to supply problems in producing countries such as Nigeria, few analysts are willing to call an end to crude’s rally.

Crude has been boosted in recent days by especially strong demand for diesel in China, where power plants in some areas are running desperately short of coal and certain earthquake-hit regions are relying on diesel generators for power.

Meanwhile, analysts say that the weakening of the US dollar against the euro also allows investors to see hard commodities like oil as a hedge against inflation.

Hence, investors pour investments into the crude futures market when the greenback falls. A weak dollar also makes oil less expensive to buyers dealing in other currencies. As such, many investors believe the dollar’s protracted decline over the past year has been the most significant factor behind oil’s rise.

The suggested retail prices of petroleum products as of May 27 are: unleaded gasoline averaged P50.33 to P52.57 per liter, diesel at P42.80 to P45.47 per liter and kerosene at P47.15 to P50.80 per liter. LPG or cooking gas now ranges from P582.00 to P628.00 per 11-kilo cylinder.

Oil firms increased their diesel prices by only 50 centavos per liter two weekends ago. 

But later on, the firms realized that at the rate global oil prices are going, they cannot afford to implement minimal oil price adjustments.

Energy Secretary Angelo Reyes said, “We are faced with a regime of high oil prices. This is the reality and we should brace ourselves for adjustments in local pump prices. The benefits of the programs we are implementing to attain energy independence will not be immediately felt since most interventions in the energy sector are medium- or long-term in nature.”

Reyes said the DOE continues to implement existing programs aimed at achieving energy security and self-sufficiency to mitigate the impact on the general public of oil price surges in the international market.

These measures include advocating the efficient use of energy, promoting the biofuels program, advancing the renewable energy bill in Congress and continuing operations against colorum and kotong.

The energy chief said there are moves to create a transport fund that drivers and operators could tap to convert their vehicles to run on liquefied petroleum gas or compressed natural gas.