Gov’t-backed study says no fuel overprice

A group the government commissioned to look into allegations of overpriced fuel prices in the country absolved local oil firms yesterday of charges of collusion and profiteering on prices of oil products.

A study jointly conducted by auditing firm SyCip Gorres Velayo & Co. (SGV) and the University of Asia and the Pacific that based on the price audit they conducted “oil prices do not seem to have been unreasonably high.”

The study, nevertheless, covered only the prices of products of the country’s two oil refiners Petron Corp. and Pilipinas Shell Petroleum Corp.

The report submitted to the Department of Energy (DoE) yesterday said the audit was done based on comparing the trend of international benchmark crude oil and refined products prices with local pump prices.

Also included in the audit was the price build-up of prices compared with the shares of Petron Corp., which remains the only listed refiner in the country.

The study also pored over the financial performance indicators of the major oil companies, the study reported.

“The price data suggests that local pump prices have not gone up as fast as the price of crude abroad or the Mean of Platts Singapore (MOPS), used as a regional benchmark, prices for diesel and unleaded gasoline,” it said.

The study even suggested that oil companies’ margins have probably shrunk during the period that oil prices were climbing.

“Statistical correlations seem to bear this out as well. Philippine pump prices simply tracked MOPS prices. A comparison of the share of the oil company take in 2007 with that in 1998 shows the same trend of a declining share of the pump price that goes to the oil company,” it stated.

If oil companies have been overpricing, it should show up in higher profit rates, the study added.

The study noted the adjusted return on equity figures for Petron and Shell do not appear extraordinary.

“From another perspective, that of the stock market, if an oil company like Petron had been performing very well, one would expect its stock price to have appreciated significantly too,” it said.

It said if Petron had been significantly more profitable than other companies listed on the stock exchange, its stock should have outperformed the stock market index.

It said, however, the performance of Petron’s stock price has not been outstanding. –Daily Tribune