Cebu businessmen want answers from oil companies too

Why do gas prices in Cebu vary so much from other regions? That’s the question Cebu businessmen and the local government want oil companies to answer.

The Cebu Chamber of Commerce and Industry (CCCI) recently wrote to President Gloria Macapagal-Arroyo to complain about the high fuel prices in Cebu.

The chamber’s president, Sa-muel Chioson, said the same day President Arroyo issued EO 839, freezing fuel prices in Luzon, oil companies increased their prices by an average of P2 in Cebu.

The chamber said while the average diesel price in Metro Manila is P28 per liter, it costs P36.85 in Cebu. Unleaded fuel costs around P26.41 in Metro Manila, while it sells for P45.19 in Cebu. What gives? Are the oil companies trying to recoup their so-called losses (because of the EO 839) in Cebu?

It is natural under a dere-gulated industry for prices to vary from region to region, because of the wholesale cost, cost of shipping, the tax, and the price on the street. Gas stations also have to check out each other because there is after all supposed to be competition among them.

But for Cebu and the NCR to have a P9 average difference in their oil prices is something that needs explanation.

“While the Big Three oil companies have been unable to give a plausible explanation for the higher fuel prices in Cebu versus prices in the rest of the country, they continue to impose increases, further disadvantaging Cebu business and the entire Cebu population,” said Chioson in the Chamber’s letter to the President.

The chamber, as well as the Cebu local government, already has a complaint, pending with the Joint Energy and Justice Departments Task Force, against Shell, Petron and Chevron for the price discrepancies between Cebu and the other regions.

Pilpinas Shell’s Robert Kanapi, in a meeting with Cebu Governor Gwen Garcia, said gas prices in Metro Manila and Luzon are cheaper because the local refineries and depots are located there.

Generally speaking, the closer the locality is to a refinery or a central distribution point, all other things being equal, the lower the price ought to be. So the explanation might hold water. However, local businessmen said what about places that are relatively farther from said refineries and depots, like Cagayan de Oro and Davao, which have much cheaper fuel prices than in Cebu?

In the oil industry there’s a technique known as zone-pricing, essentially raising wholesale prices in areas that can absorb it.

Perhaps oil companies think Cebu can take the hit of higher fuel prices, but Cebu businessmen and consumers are certainly not take this sitting down. –Ernesto F. Herrera, Manila Times