Reyes calls for meeting on overpriced fuel

Energy Secretary Angelo Reyes asked Economic Planning chief Ralph Recto to a conference with oil players next week to “reconcile any differences in perception as to what prices are reasonable” when it comes to petroleum products such as gasoline and diesel.

Reyes made the move in reaction to the claim made by Recto in media that pump prices of gasoline are “overpriced” by eight pesos per liter and that diesel should not sell for more than P32 per liter.

“I understand that Neda Director General Recto has made pronouncements on the recent pump price of oil products and said that these are unreasonably high,” said Reyes.

The Energy chief had just come from an international conference on nuclear energy in Beijing and was on his way to the 3rd Asian Ministerial Roundtable Conference in Tokyo when he made the invitation to Recto.

A meeting between Cabinet officials and the oil industry will enable both parties to take the appropriate action to best promote the welfare of the Filipino people, consistent with the prevailing law on the deregulation of the oil industry, Reyes said.

The Oil Deregulation Law of 1998 had removed government’s regulatory power over the pricing of downstream oil products.

Reyes had been constantly meeting with consumer groups, industry players, the general public and transport organizations to tackle issues on fuel prices.

The University of Asia and the Pacific and the SGV auditing firm had conducted an independent study on the prices of local oil products.

The UA&P-SGV team said price data from January 2005 to January 2008 suggests that local pump prices had not gone up as fast as the price of crude abroad.

It said that this meant that the margins of oil companies have probably shrunk as borne by statistical correlation of the declining share of the pump price that goes to local oil players.

“If oil companies have been overpricing, it should show in higher profit rates. However, the adjusted return on equity figures for Petron and Shell do not appear to be extraordinary when compared with the benchmark market interest rate,” said the UA&P-SGV report.

But Recto, citing his department’s computation, said that gasoline was overpriced by as much as P8 per liter.

A day after Recto announced his finding, the oil companies raised their pump prices by at least 50 centavos per liter. –Alena Mae S. Flores, Manila Standard Today