Wake up call for Cebu oil consumers - I

Like a lingering flu, the gaping gulf of difference in oil pump prices in Manila—and elsewhere nationwide—with that in Cebu has continued to pester the Cebuanos for sometime now.

The P5.00 to P8.00 per liter disparity cited in the Lower House probe held in Cebu City two months ago, has hardly scaled down. As of November 17, diesel sold in Manila varied between P26.60 up to P31.00 per liter; whereas in Cebu it’s P35.75 to over P36.00 per liter. In Cagayan de Oro, diesel fuel hovers at P34.90 per liter, but what’s significant is that in CDO which is farther than Cebu from Manila or Luzon fuel refineries, it’s 85 centavos cheaper.

The unleaded gasoline sold at P44.06 or so per liter in Cebu is P35.10 to 38.07 in Manila, or a difference of P6.00 to over P8.00 per liter. Again, in Cagayan de Oro, unleaded gasoline is P41.55 per liter, or cheaper by P2.51 than the Cebu price. The premium/XCS or similar gasoline variety runs along the unleaded trend, that is pump prices in Cebu are much higher than in Manila and elsewhere nationwide.

To recall, that Lower House committee hearing was on complaint of the Cebuanos led by Gov. Gwen Garcia and the Cebu congressmen on the rank injustice to Cebu fuel consumers. As then expected, the beleaguered spokesmen of the “Big 3” oil firms just resorted to their song and dance bluffs with bumbling ratiocinations of vague “market forces” that angered the Cebuanos more for taking the Cebuanos for idiots. Their vain run-around explanations didn’t fly sensibly even to fisherfolk or barbershop common sense; thus, angering Cong. Pablo Garcia for trying to make Cebuanos for fools.

For example, the P5.00 to P8.00 per liter over-price isn’t justified by the factor of competition, or the fluctuations of world oil prices, or the basic law of supply and demand, or even by the variance in production costs, or whatsoever market forces. It’s all intra-Philippine situation within the control or machination of the triumvirate fuel firms.

The only plausible factor ought to be the shipment or transportation costs of the fuel products from the refinery plants in Manila or in Luzon to distribution points in the Visayas and Mindanao. But then, even that factor as basis, why are the pump prices in Cebu higher than any point in Mindanao which is more distant from the refinery source?

Or, even between Manila and Cebu, how could the pump price difference be P5.00 to P8.00 per liter – not per gallon, or per barrel/drum, or per ton – to compensate for or cover the shipping costs and handling? Precisely, Rep. Raul del Mar exclaimed why not just compute or add to the Manila pump price the actual transportation costs to Cebu from the Manila refinery for the fair pump prices in Cebu which, obviously could not be as high as P5.00 to P8.00 per liter?

There had also been a hazy hint that Cebu fuel consumers are just paying the actual fuel prices, apparently inferring that in other places nationwide the oil firms are sacrificing their pump prices, meaning at a loss. That suggestion is preposterous, to say the least. But even if so, granting arguendo, why punish the Cebu consumers? Thus, Congressman Eddiegul rightly observed that the “Big 3” are making Cebu a “glutton for punishment”.

What appears clear then is that the “Big 3” fuel companies may have been paying a left-handed compliment that Cebu being supposedly the richest province in the country as touted by the Capitol, Cebuanos “can afford” to pay their so-called actual fuel costs. Is that fair?

Or, is it not, again, taking Cebuano consumers not only gullible fools, but the stupidest of fools. What is likewise obvious is that the ultimate market force visited upon the Cebuanos could be the cartelized pricing by the giant suppliers. That in essence is an abuse of the laissez faire principle which could have sprung from their ready fallback justification of the oil deregulation law.