doe sees oil prices rising by p1.50/liter more

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article in Manila Standard 5//9/05

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Local pump prices of petroleum products could go up further by P1 to P1.50 per liter this month due to surging crude prices in the world market, the Department of Energy said yesterday.

Energy Undersecretary Peter Abaya said streaking oil prices in the world market had pushed companies to raise their prices by P0.50 per liter anew over the weekend.

Oil companies adjusted prices of gasoline by P0.50 per liter and liquefied petroleum gas (LPG) by P0.50 per kilogram or P5.50 per 11 kilogram tank while maintaining that of diesel.

LPG, primarily used by households for cooking, is now sold on retail between P372.50 and P425.50, depending on the brand.

Gasoline prices now average between P32.70 to P33.88 for regular unleaded and P33.55 to P34.69 for premium unleaded.

Pilipinas Shell Petroleum Corp. initiated the latest round of oil price increase when it adjusted pump rates at 6 a.m. Saturday. Caltex Philippines Inc., Total, Petron Corp., Eastern Petroleum and Flying V followed suit.

World oil prices continued to surge to as high as over $70 per barrel last week due to strong demand amid concerns about supply interruptions following the devastation brought about by Hurricane Katrina in the Gulf coast.

Prices are expected to go up further with the onset of the winter months and on higher demand for heating oil.

The DoE said that despite the latest round of price increase, the Philippines still has one of the lowest pump prices in the region.

“While there is a wide sentiment among analysts that we have not seen the worst in prices and that volatility will continue to linger, prices in the local market remain one of the lowest compared with that of other countries,” Energy Secretary Raphael Lotilla said.

DoE data showed that the price of unleaded gasoline in the local market stood at about P32.93 per liter compared to P93.81 per liter in Hong Kong and P36.25 per liter in Thailand.

Retail price of diesel is at P30.95 per liter against P58.31 in Hong Kong and P31.95 in Thailand.

Asean countries like Thailand, Indonesia and Malaysia imposed subsidies to depress domestic oil prices. However, these countries infused huge amounts of money to keep the subsidies. Indonesia spent $7 billion, Thailand $1.5 billion and Malaysia $1.4 billion to keep pump prices artificially low.

The three Asean countries recently lifted the subsidy scheme and anaslysts expect inflation to jump to double digit levels, adversely affecting their economies.

“We cannot afford any form of subsidy. But we have to drastically reduce our consumption of imported oil in a regime of extraordinary high oil prices to cushion its impact on the economy and to protect our foreign exchange reserves,” Energy Secretary Raphael Lotilla said.