Palace closely monitoring oil prices

MANILA, Philippines - The government is closely monitoring oil prices as political unrest in some parts of the Middle East and Africa continues to threaten supply and raise concerns over possible price manipulation by local oil firms.

But deputy presidential spokesperson Abigail Valte said the Palace was not considering oil regulation because it would entail huge funds.

She said it would “take a lot of money” to subsidize and take over the oil industry.

Valte said in a press briefing in Malacañang that Department of Energy (DOE) Secretary Jose Rene Almendras would meet with various stakeholders, including the Consumer and Oil Price Watch, to make sure that oil companies would not take advantage of the situation.

In the meeting, stakeholders would try to determine if the computations or bases for local oil prices were reasonable.

Sen. Ralph Recto said oil companies were exploiting the unrest in the Arab world to raise pump prices of gasoline way beyond its purchasing costs 30 to 55 days ago.

Valte said Almendras was convinced local pump prices were within the allowable range vis-à-vis global crude prices.

But she called on the oil companies to “just be true or stay faithful” to the real costs. The oil companies have claimed that the increases were only half of what they should reasonably impose.

Almendras, meanwhile, said they are reimposing a minimum fuel inventory requirement for oil companies and bulk suppliers to ensure stable supply in the country.

The DOE chief has issued a circular requiring oil firms to maintain a minimum stock equivalent to 15 days’ supply of petroleum products.

For liquefied petroleum gas, the minimum inventory level shall be kept at seven days’ supply, according to the DOE circular.

Oil refiners are required to maintain a minimum inventory of 30 days’ supply of petroleum crude oil and refined petroleum products.

A similar rule was issued in January 2003 but relaxed two months later when crude prices in the world market softened and the country was left with high inventory levels.

“The current political and civil unrest in several countries in the Middle East requires the reinstatement of the minimum inventory requirements to ensure stability in the supply of petroleum crude oil and petroleum products in the Philippines,” Almendras said in the circular issued Feb. 28.

Political will

Sen. Juan Miguel Zubiri called on the Aquino administration to exercise political will and go after oil companies found manipulating fuel prices. 

“The DOE said it is not inclined to look into the books of oil companies so it is a matter of political will. There’s no need to amend the law since it’s already there. Sen. Recto is right about stock bought previously but selling at today’s prices, so their windfall profits will be huge,” Zubiri said.

“I think we should look into the probability of coming out with the windfall tax on oil companies because if you look at the top, which is the richest corporations here in our country? In the top five, two are oil companies. This means they are not losing in terms of income, it’s the people who are at the losing end,” Zubiri said.

“As far as these oil companies are concerned they have not violated any law and we’re not accusing them of misdeclaration. What we can do is probably file a taxation on windfall profits because I consider that windfall profits, making money out of the misery of our people,” Zubiri added.

“They (oil companies) will continue doing what they are doing because the DOE seems to be afraid of examining their books or asking them to go slow,” he said.

With a minimum inventory of 30 days, Recto observed that an oil company should have already ordered its fuel stock for March 1 to 31 and should be unaffected by recent spikes in global oil prices.

“We beg oil companies to hold off their greed even if it would be a lame attempt to show to the public that they are really sensitive to the people’s already dire situation,” Recto, Senate ways and means chairman, said.

“Brushing up on our economics 101, the ‘first in, first out’ should apply for oil stocks bought at old prices while those procured at new prices should be sold based on their marked up price,” Recto said. With Christina Mendez