High fuel prices checked

High fuel prices checked

The persistent complaint among Boholanos versus the high prices of fuel in the province will be issued this week with an explanation from the Department of Energy (DOE) Manila amid clamor that authorities should check on why gasoline dealers are imposing exorbitant prices which are even higher than those in other provinces,

The much awaited formal report from DOE is being closely watched by the Boholanos considering that despite a dialogue convened by Gov. Edgar Chatto regarding the prices of fuel in the city’s pumping stations, the riding public is at the “mercy” of these gas station owners.

In fact, the riding public is disgusted that despite the entry of the so-called “independent” players, the prices remain high.

It may be recalled that Gov. Chatto invited to a meeting representatives from Manila-based “independent” players in order for them to open their pumping stations and tag lower prices compared to the big three, Shell, Caltex and Petron.

However, to the dismay of the public, the latest entrant which is Filoil is selling fuel at the same prices as those of the big three.

The pronouncement of DOE which is slated to be issued this week will hopefully provide the Boholanos the right explanation on why prices of fuel in Bohol are more expensive than Cagayan de Oro City and other Mindanao provinces when their distance to the refinery station in Luzon is farther compared to Bohol.

A comparison made by the Chronicle between prices in Cebu and Bohol showed that fuel in the province is sold P3 to P7 higher per liter as compared to the prices of gas stations in Cebu City.

(Box: Chart format)



CEBU            P 53.49        P 47.04      P53.99

BOHOL         P 60.30        P 50.95      P59.60

Instead of exploring solutions, officials of the Department of Energy in the region justified the high transshipment cost and lower demand as top factors in high disparity of prices in Bohol—particularly Tagbilaran City—compared to neighboring areas.

DOE-7 Regional Director Antonio Labios hinted that disparity of prices from an area to another is just a normal result of varying transshipment costs, but advised Boholanos to just wait for the statement from DOE-national set to be issued this week.

Labios said they are more careful now to avoid being branded as spokesperson of the oil companies.

“If you observed, DOE refrains from announcing oil price increases and just wait for the oil companies to do the announcement. This is to avoid being suspected that DOE is the spokesperson of the oil companies. In November, DOE sent a team here to study the concerns raised by the governor,” Labios said.

He also said rationing of oil supply by government is not feasible because the government cannot afford the logistics required and the entire cost of the process.

He said oil companies consider many variables in their pricing mechanism, including the source of petroleum products.

Labios explained that of the many determinants of oil prices, the major reason in the present price movements is the deregulation law.

He, however, pointed out that prior to the enactment of the deregulation law, the profits of oil companies even reached 12 percent. In the duration of the implementation of deregulation, the profit of oil companies reduced much to five percent.

Labios confirmed the observation that prices of petroleum products in Bohol are higher than in Davao, Cebu and Dumaguete City—supposedly farther from the refineries in Luzon.

Disparity of prices have also been observed within Bohol wherein retailers in Ubay sell petroleum products at lower prices than those in Tagbilaran City.

He said he already heard of such report last year, but clarified that it is not exclusive in Bohol because Bacolod, Tacloban and Iloilo also have the same concern.

He cited that in the past, the disparity of prices even reached P4-5 per liter, but it has been noted the disparity now is lower in Cebu by P2-3 per liter than in Manila.

Moreover the demand is higher in Cebu. But there is even one gas distributor in Cebu whose different outlets have different selling prices.

Anyway, DOE-national will issue this week an assessment on the Bohol situation based on the study conducted in November in response to the query of Governor Chatto regarding the issue.

Moreover, the government already created a task force to look into the books of oil companies.

Labios said there had been two studies on the oil prices already. One of them was by the independent review committee in 2005 and the other was the study by Sycip-Velayo Auditing Firm.

The Philippine consumption of 300,000 barrels a day is not even one percent of one percent of the world market, unlike China where they could make bulk orders.

They import directly from Singapore which is the hub of refineries, according to Labios.

Engr. Rey Maleza, supervisor of DOE-7 Energy Industry Management Division, explained that while the average daily consumption in the Philippines reaches around 300,000 barrels, but the two refineries in the country can even hardly produce 200,000 barrels a day. The rest of the supply has to be imported, including the crude oil.

“You cannot deliver a specific volume to Bohol and deliver the order of Siquijor in the same shipment. Then compute the transshipment cost from there,” Maleza further explained.

He said the primary source of Siquijor is Dumaguete and Cebu, while   Davao is importing directly from Malaysia and Indonesia and the big three companies directly import from Mindanao.

Maleza pointed out that there are more areas where deregulation works for the interest of consumers and said that it is, in fact, one factor to attract investors.

He explained that prior to deregulation, ERB determines the prices of petroleum products (with Dubai as the source) through hearings which takes time and involves more expenses.

“In world market, oil price moves not daily but hourly. The moment ERB comes up with a price, the figures already changed many times in the world market. Prior to deregulation, what ERB approved was fixed profit. But now, it’s based on operational cost,” Maleza explained.

He suggested more players down the line, citing that it would be difficult for all the retailers to sabotage the prices if there are about 20 of them in an area.

“So the more retailers in one place, the better. So we are encouraging oil companies to open in areas where there is no outlet of petroleum products yet to bring down the prices,” Maleza said.(AV)


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