Palace gags Recto, Reyes on oil price hikes

MANILA, Philippines - Please shut up.

Economic Planning Secretary Ralph Recto and Energy Secretary Angelo Reyes have been told by Malacañang officials to keep their mouths shut on the issue of whether local oil products are overpriced.

This is the reason why the two have suddenly stopped their word war on oil pricing, according to a knowledgeable source in the House of Representatives.

“The Palace gagged the two Cabinet members,” the source said.

Recto, who heads the National Economic and Development Authority (NEDA), and Reyes have been at loggerheads over what should be the prices of petroleum products.

The NEDA chief claims that these products are overpriced by as much as P8 per liter, while Reyes insists that local prices are reasonable and reflect the price of crude oil in the world market.

The Department of Energy (DOE) boss once complained that Recto was talking about an issue that is not within his turf.

But Recto said oil prices greatly affect the economy and that he was within his right to speak on oil pricing to protect the public.

The House source said Recto felt that the Palace gag order meant that Malacañang was supporting Reyes’ stand that prices were reasonable.

“I have information that Ralph threatened to resign,” the source said.

Last July 30, during the hearing of the House energy committee on oil prices, an underling of Recto submitted a NEDA position paper in which the agency insisted that oil products are overpriced by P8 per liter.

Based on its computation, NEDA said gasoline should be selling for only P32 per liter instead of P40-P41.

It said it has presented to the DOE and the oil companies its method of computation for comparison, but the oil firms refused to reveal their pricing formula.

It said its figures were based on data from the DOE and the oil companies themselves.

NEDA pointed out that it should not be difficult to compute prices since the price of crude oil in the world market, the peso-dollar exchange rate, freight, insurance, and profit margins are the main costs that go into oil pricing.

DOE Director Zenaida Monsada echoed Reyes’ stand that prices were fair and reasonable.

In fact, she said prices in Metro Manila are lower than what they should be if it is based on the cost of importing oil products from Singapore.

She said gasoline should be selling at P45 instead of P40-41 per liter, while diesel should retail for P33 instead of P28-P29.

“It is the prices in Cebu that are reflective of prices in Singapore and the international market. Prices in Metro Manila are lower by P5 due to stiff competition,” she said.

Understandably, representatives of oil companies who attended the energy committee hearing supported the DOE stand.

One of them, Flying V’s Joey Cruz, said “unethical practices” by some players were driving prices down in Metro Manila, apparently referring to smuggling.

“Because of such practices, they are able to sell at lower prices. Some new importers, wary of upward price movements in the world market, also sell lower to cut potential losses,” he said.

Shell’s Roberto Kanapi said transportation cost is one factor that accounts for higher prices in the provinces.