LPG prices increase by P3.50 per kilo in Visayas, Mindanao

MANILA, Philippines - Petron Corp., the country’s leading oil firm, raised the price of its liquefied petroleum gas (LPG) yesterday by P3.50 per kilo in the Visayas and Mindanao.

An advisory said Petron increased its LPG bulk prices effective Nov. 6 to reflect the rise in LPG contract prices for the month of November.

Retail LPG prices will be unchanged for Luzon due to Executive Order 839, which freezes the prices of all petroleum products at Oct. 15 levels because of the state of calamity.

With the $57 per metric ton (MT) increase in the international contract price for the month of November, the price increase for LPG in the local market should have been P3.50 to P4 per kilo.

Meanwhile, oil companies are preparing a scheme that will mitigate the impact of the lifting of EO 839.

There are indications that the EO will be lifted soon to stop the bleeding of the oil companies’ coffers.

Flying V chairman Ramon Villavicencio estimated that the impact to consumers is around P4.50 per liter (diesel and gasoline), adding that they might carry out a staggered P1.50 per week increase to reflect the true cost of petroleum products in the local market.

“We want to mitigate the impact to consumers so we will divide the impact over three weeks. The EO will be lifted soon because the higher authorities know that it’s not viable as far as cost is concerned. There is a huge gap between cost and the pump price. So we at Flying V are proposing to stagger the expected impact to consumers once the EO is lifted,” he said.

Villavicencio said they hope there would be a reversal of price trends in the global oil market to lessen the impact of the lifting of the EO to consumers.

“For example, if there is an increase, we will add that or if there is a rollback, we will subtract that,” he said.

The oil executive said the firms could no longer recover the previous price increases but they would have to adjust their prices based on the current price trend in the international market if the EO would be lifted.

Villavicencio said the industry has sent an open letter to President Arroyo for the lifting of the EO, which was implemented to uplift the plight of those affected by typhoons “Ondoy” and “Pepeng,” due to their disastrous effects on the economy.

“We are one with you in wanting to help the victims of typhoons Ondoy and Pepeng. We believe, however, that freezing the prices of fuels throughout the entire island of Luzon to help the typhoon victims, found only in several provinces in the North and in some areas of Metro Manila and outlying provinces, carries disastrous short- and long-term risks for the whole country, including eventually the very people we want to help,” the letter said.

Other signatories to the open letter were biodiesel producer Chemrez Technologies Inc., Total Philippines, Pilipinas Shell, Petroleum Institute of the Philippines, Pryce Gases, PTT, Seaoil Philippines, Liquigas Philippines Corp., Int’l Engineers Phils, Eastern Petroleum and USA88/Filpride Energy Corp.

“The imminent danger to the economy, business, and employment from freezing fuel prices far outweighs the intended benefits. A weakened oil sector, forced to sell at a loss, cannot continue to play its strategic role as the government’s partner in the nation’s growth and in ensuring an adequate level of supply given the instability of world prices of crude oil and petroleum products,” the oil firms said in an open letter.

The oil companies argued that “warnings of supply shortages that will occur as a result of EO 839 were not intended to blackmail government nor to sabotage the economy but simply to advise what the consequences of EO 839 will be.”

The oil companies requested a dialogue with the President to air their side on the contentious issue.