Oil firms agree to weekly price adjustments

OIL companies have agreed to adjust fuel prices on a weekly basis and to again open their books in an apparent bid to qualm growing public clamor against recent price hikes at the pump, the Department of Energy (DOE) said.

Energy Secretary Angelo Reyes said industry players have agreed to these terms in a meeting organized by the government on Monday.

“Oil companies will submit their audited financial statements for the year ending 2008 as soon as possible to DOE . . . It was also agreed henceforth adjustments will be made on a weekly basis to more closely reflect the pricing in the international market,” Reyes said.

The DOE chief said the government will closely monitor oil companies’ compliance with the agreement to make sure that their profits are reasonable.

Last year, the agency also reviewed oil firms’ books and found that their return-on-investment, a measure of profitability, was between 4 percent and 6 percent.

“The question then was why oil companies adjust prices monthly and not weekly . . . We want to avoid the situation where oil companies are quick to adjust when prices are going up and slow to adjust when prices are going down. When we do it on a monthly basis then there are more tendencies for that, but if we do it on a weekly basis then there is less opportunity for that,” he said.

Reyes said both major and independent oil players should submit their respective audited financial statements by the middle of next month.

The meeting with industry players was held in response to calls from various groups for an explanation as to why fuel prices rose several times this month when international prices were still within last month’s averages.

Average prices of finished petroleum products imported from within Asia, particularly unleaded gasoline, dropped to $52 a barrel as of March 23 from $58 a barrel last month, while diesel prices remained at $52 a barrel on average over the same period.

Data from the DOE showed that the monthly average of Dubai crude, the benchmark for refiners, inched higher to $44 a barrel from a February average of $43 a barrel.

However, oil companies, said that weekly price fluctuations drove them to adjust their prices, especially since a major player, Pilipinas Shell Petroleum Corp., moves its prices on a weekly basis.

“The consensus is that these increases in prices have been reflective of the movement of oil prices in the world, but we are closely monitoring it,” Reyes said. –Euan Paulo C. Añonuevo, Reporter, Manila Times