Small oil players lead in raising pump prices

MANILA, Philippines - Small oil players Eastern Petroleum Corp., Unioil Petroleum, Flying V, and Phoenix Petroleum Philippines fired the first volley of oil price hikes yesterday after the lifting on Monday of the government-imposed price cap on petroleum products.

Eastern Petroleum raised the prices of diesel by P2 per liter effective today, and of unleaded gasoline and kerosene by P1.25 and P1.50, respectively.

Unioil Petroleum implemented a price increase of P1.50 per liter for all products while Flying V’s prices were P1.50 to P2 per liter higher depending on “trading areas.”

Phoenix raised the price of its diesel by P2 per liter and gasoline by P1.50.

President Arroyo’s lifting of Executive Order 839, which required petroleum players to maintain their prices at Oct. 15 levels, took effect last Monday.

Surprisingly, no price hikes were implemented on Monday although some retail stations did not sell fuel.

At the Senate yesterday, Energy Secretary Angelo Reyes got a scolding from senators for mishandling the current oil situation, causing panic and apprehension to the public.

Sen. Joker Arroyo said Reyes should be more circumspect next time in dealing with the crisis that arose from EO 839. Arroyo said Reyes “mishandled” the situation with his statement that there were only eight to 13 days’ supply of fuel left.

“All I am saying is… when the secretary of energy said there is supply of eight to 13 days, what gets into our heads is the storage facilities in Pandacan do not have any reserves,” Arroyo said. “You can imagine the repercussions.”

Reyes clarified that the statement attributed to him was based on feedback from one of the small oil players, and that this clarification was not highlighted by media.

Since the EO’s issuance on Oct. 23, global crude costs have been on an uptrend.

The average price of Dubai crude – the pricing benchmark used by oil refiners – has reached $78 per barrel this month as against last month’s $73 per barrel.

Contract prices of LPG rose to $660 per metric ton this month from $589 per MT in October.

Arnel Ty, LPG Marketers Association president, said they would likely increase their LPG prices by P3 per kilo next month.

Zero duty backed

Meanwhile, Pilipinas Shell Petroleum Corp. has expressed support for the reduction of the Most Favored Nation (MFN) rates for crude from three percent to zero percent.

“We support the proposal to reduce the duty rate from three to zero percent for crude oil, to include even those sourced from non-ASEAN countries, in order to ensure the continued viability of the petroleum refining industry in the Philippines,” Shell said in a position paper.

“Unequal tariff rates applied to crude sourced by Philippine refiners from non-ASEAN countries and imports from ASEAN countries will eventually result in the decimation of the local refinery business,” Shell said. 

“There are more significant benefits to the government for maintaining a domestic or local refining business in the country. Beyond raw dollars-and-cents statistics of investments, there are related economic benefits of domestic refining,” it added.

More time for Shell

Meanwhile, Bureau of Customs commissioner Napoleon Morales said the bureau is open to allowing Shell to settle its back taxes of more than P7 billion by Dec. 31.

Morales told reporters that Shell president Ed Chua had reportedly called up to schedule a meeting tomorrow at 2 p.m.

Morales said he did not know why Chua requested for a meeting, but the request came days after the BOC sent a letter to Shell country tax manager Nigel Avila demanding the immediate payment of the back excise taxes that covered the importation of unleaded gasoline declared as Catalytic Crack Gasoline (CCG) from 2004 to 2009.

The CCG shipments reportedly landed at the Port of Batangas.

The agency has threatened to put on hold the release of future shipments of CCG unless the back taxes are paid.

“If they would offer a compromise then we would talk about it. Maybe I would give them until yearend to pay even on staggered basis because we really need the money,” Morales said.

The BOC has been encountering difficulty in meeting its monthly collection targets. BOC attributed the problem to lower import volume resulting from the global economic crisis.

Morales said the problem is evident in Manila’s bargain district of Divisoria despite the coming Christmas season.

“Before, when you go to Divisoria at this time it would be difficult to walk but now there is still some space to walk around,” he said. Divisoria is also famous – or notorious – for its vast supply of cheap smuggled goods.

For the period January to September this year, BOC’s collection shortfall has grown to P36 billion and the bureau has been trying to reduce the shortfall through planned auctions and more efficient collection.   – Christina Mendez, Evelyn Macairan, Sandy Araneta