Pilipinas Shell Petroleum Corp. announced Monday that it would cut prices of diesel and kerosene by 40 centavos a liter.

It also announced that it would increase the price of gasoline by 25 centavos a liter effective Tuesday.

Eastern Petroleum said it would cut the price of diesel by 25 centavos but would raise the price of gasoline by 35 centavos a liter.

Energy Secretary Jose Rene D. Almendras said motorists would get much-needed relief this week as oil firms in the country were expected to implement a rollback in fuel prices.

At a Palace briefing, Almendras said last week’s decline in international prices of crude would prompt oil firms to cut prices.

He said that from April 16 to April 19, prices went down but rose on April 20 due to the announcement of Saudi Arabia that it would curtail production to a certain percentage.

Bigger cuts

Almendras said bigger cuts were expected particularly from firms like Shell that raised prices of gasoline and diesel last week.

“This week, our view is oil prices should roll back depending on how much you increase last week. So if you increase last week, your rollback should be higher. If you did not increase, then it should be lower than those that made the increase,” he said.

If Shell’s adjustment in the prices of diesel and gasoline is any indication, motorists may not get the relief that Almendras is hoping for.

Last week, Shell was one of the few oil firms that raised prices of gasoline by 60 centavos, of kerosene by 40 centavos and of diesel by 25 centavos a liter.

Explain increase

The Department of Energy (DoE) asked oil companies last week to explain why the latest round of increases was higher than its computations.

The DoE pointed out that the price increases implemented on Tuesday last week were higher than its computations of 16 centavos per liter for diesel and 39 centavos for gasoline.

Letters were sent to the companies that jacked up fuel prices above those levels.

Almendras said a task force composed of the DoE and the Department of Justice would determine whether there was abuse on the part of the oil companies.

“The law is clear. If the task force feels there is abuse, the task force will file a case in court. They can be put (in) jail,” he told reporters.

Overpricing

A militant fisherfolk group, Pamalakaya, said Almendras “knew the price per liter of petroleum products was overpriced by more than P9, but his office is not doing anything to correct this corporate crime.”

Almendras said this was the fourth time his office had asked oil firms to explain the discrepancy in price increases of petroleum products.

He said he did not know the number of oil firms that raised prices last week, but noted that two of the large oil firms in the country did raise their prices and one of them later rolled back prices.

“So I guess the one that did not roll back is the one that needs to explain,” he said, apparently referring to Shell.

Chevron (formerly Caltex) rolled back pump prices on April 19, a day after increasing them by as much as 70 centavos per liter, after the energy department questioned the increase. Petron Corp., the country’s biggest oil firm by market share, did not increase its prices.

Two views

Almendras said there were two views on how to treat the oil firm that rolled back prices—“not to investigate since it rolled back its prices and the other, to investigate because it did raise its price and had earned from it.”

Data from the DoE showed that prices of the Dubai crude benchmark hit $115.26 a barrel. Prices of diesel, based on the Mean of Platts Singapore benchmark for refined petroleum products, stood at $139.94 a barrel to date, translating to a local pump price of at least P47.43 a liter.

The price reduction for diesel will be the third to be implemented since January this year, not counting what happened last week when some oil companies cut fuel prices to cancel out the increases they implemented the day before.

Since the beginning of the year, local oil firms have raised fuel prices 13 times, adding up to a total increase of P10.20 a liter for gasoline and P10.10 a liter for diesel.

Total reductions, on the other hand, remained marginal at only P1.75 a liter for gasoline and 25 centavos for diesel, excluding this week’s price cuts.

He also said the task force was looking into the pricing scheme being implemented by oil dealers as he noted that there were areas in the country where oil prices were higher compared with the others.

“Do you know that in certain places in Mindanao, sometimes the price of oil is cheaper than in Metro Manila?” he said.

Almendras said some people believed oil prices should be on the downtrend.

Heavily speculative

He said he raised at a conference of the International Energy Forum in Abu Dhabi weeks ago the country’s position that “international oil prices are now heavily speculative.” The Philippines is now a member of the forum’s board.

Almendras said he had no “factual computational basis” for the country’s position but pointed out that fellow non-oil producing countries at the conference supported his stand.

He said the Philippines took the position because Saudi Arabia had said it had no problem filling up the shortfall in oil production by war-torn Libya.

Amy Remo & Christine Avendano, Inquirer.net