Gov’t demands two oil giants cut back prices

Published by rudy Date posted on April 26, 2011

The Department of Energy (DoE) demanded that oil companies roll back fuel prices citing its computations make the increase in oil product prices of as much as 70 centavos per liter just before the Lenten break unwarranted. Energy Secretary Jose Rene Almendras threatens to sue two oil companies which he did not identify for supposedly “abusing the Oil Deregulation Law.”

Refiner Pilipinas Shell Petroleum Corp., Chevron Philippines Corp. and Total Philippines Corp. raised pump prices last April 19 but Chevron the next day withdrew the price increase after Petron Corp. held back on the price increase.

The cost of regular gasoline rose by 70 centavos per liter, unleaded gasoline by 60 centavos per liter, diesel by 25 centavos per liter and kerosene by 40 centavos per liter during the contested price increases.

Oil companies that have increased pump prices beyond the calculations made by the DoE should roll back their fuel prices this week and explain in writing the reason behind their unwarranted hikes, Almendras said.

The demand of Almendras may carry no weight, however, since the oil products have deregulated prices and an amendment or repeal of the Oil Deregulation Law would be needed for the government to enforce its will on oil companies.

Almendras who was at Malacañang yesterday, however, said the unnecessary oil price spikes last week by Shell and Total are now being investigated by the task force Department of Energy (DoE) has formed jointly with the Department of Justice (DoJ).

A refusal by the oil companies to comply with the DoE’s directive could result in a possible court case which Almendras said would be a case for abuse or violation of the Oil Deregulation Law.

Almendras also took the opportunity yesterday to give his feedback on the accusations made by the camp of former President and incumbent Pampanga Rep. Gloria Arroyo last week, criticizing the Aquino administration’s failure to temper fuel prices in the country amid the ongoing Middle East crisis.

Almendras cited data showing prices of Dubai crude and Means of Platts Singapore (MOPS) diesel higher by about $2.37 per barrel and $4.68 per barrel than prices three years ago.

Only the price of diesel was being sold relatively cheaper by P8.73 per liter today than it was last August 2008.

“In August 2008, Dubai was trading at $112.89 per barrel; MOPS was trading at $135.26 per barrel; and Diesel was being sold at $56.16 per liter. In April of 2011, today, Dubai is at $115.26; MOPS is at $139.94; and Diesel pump prices are at $47.43,” Almendras said.

“There are so many things that happened in 2008. I understand there were some gas stations that had to close down because of lack of supply. There were some financing problems as far as oil companies were concerned.

“But, again, you may be better off asking them for their experiences in 2008. I don’t mean to comment beyond just the facts. (What) we’re saying is (that) the Department of Energy continues to try and strive to make sure that we are always watching out for what is best for the people,” Almendras said.

Meanwhile, Almendras reiterated the Aquino administration’s reluctance to consider the possibility of freezing oil prices through an executive order (EO). He said the government has to take into account many things first especially the legal aspect given the obstacles that the Arroyo administration had to hurdle when it issued EO 839.

“The law allows the President to do that (oil price freeze) in a situation of emergency. Problem is what do you define as emergency? At the end of the day also, I believe that the decision would be based on the situation at that point in time,” he said.

“It probably depends on how much inventory we have or how much potential supply disruptions had such actions can be. So there will be many considerations. I’m sorry I cannot say whether it will be done or it will not be done… it will basically be a situational discussion at that point,” Almendras said. –Aytch S. de la Cruz, Daily Tribune

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