MANILA, JULY 27, 2008
(STAR) By Donnabelle Gatdula - Consumers woke up to another weekend of higher fuel prices as Pilipinas Shell Petroleum Corp. and Total Philippines Inc. announced one after the other a P1.50 per liter increase in diesel and kerosene prices, despite a further drop in crude costs in the world market.

The new round of price adjustments disappointed consumers who had expected oil firms to freeze pump prices – at least this weekend – in deference to President Arroyo’s State of the Nation Address tomorrow. It also came despite the softening of crude prices in the global market.

The price of oil in the world market fell back below $125 a barrel on Friday, extending a decline that has knocked more than $20 off prices in two weeks.

Shell made the price hike announcement at past midnight yesterday while Total implemented its own price adjustments a few hours later.

“Due to the continuous unrecovered cost of diesel and kerosene, we are compelled to increase prices by P1.50 per liter effective 6 a.m. (July 26),” Shell spokesman Roberto Kanapi said.

According to Total, the increase in the price of diesel “will partially recover the significant increase in the cost of the products over the past month.”

Petron Corp., which is partially government-owned, said it would not raise its prices.

“We are not moving today. Given that international oil prices have been on a declining trend over the past week, we will monitor over the next few days to see whether the trend will be sustained before making any pricing decisions,” Petron said.

The latest price hike confirmed warnings by some militant and consumer groups that the recent P1.50 per liter rollback in diesel prices, following a “moral suasion” from President Arroyo, was just for show.

“The people won’t fall for the zarzuela being performed by Malacañang and the greedy oil monopolies. This ‘show’ has all the signs of political desperation,” said Renato Reyes, secretary general of the militant Bagong Alyansang Makabayan (Bayan).

“Because the deregulation law is still in place, oil companies will continue to raise prices with impunity. And since the value-added tax is also in place, consumers will have to bear the burden of unjust taxation,” he said.

Small oil firms had declared that they might be able to hold off price adjustments this weekend. But they also admitted that there was still P5 to P6 under-recoveries for diesel.

“Now that we are seeing clearly large varying prices among some of the major players in the industry, we are afforded with a clear concept of customers’ choice,” Energy Secretary Angelo Reyes said of recent developments.

“While this is happening, the DOE will continue to monitor the market. And we could only hope that softening of international prices would continue,” he said.

A task force led by the DOE and the justice department is investigating possible overcharging by the oil firms.

Global trend

Concerns that high prices and the slowing US economy will undermine demand have driven oil down from a record $147.27 on July 11.

Some analysts said oil could be headed lower still. Jim Ritterbusch, president of Ritterbusch & Associates, said crude could drop to as low as $117 within about a week, while others said they expected trading to be volatile in a wide range.

“We have identified the $115-$140 interval as the most likely trading range for the quarter,” Barclays Capital said in a research note.

Even after the recent price fall, oil has risen by almost 30 percent in 2008 and is up from below $20 in early 2002 due to rising demand from fast growing economies such as China.

Oil’s rally, which the OPEC exporter group has blamed on factors beyond supply and demand, has led to pressures on politicians to take action to help consumers paying higher fuel prices.

The US Senate will vote on Friday on a Democratic bill that seeks to curb excessive speculation in the energy markets, but Republicans said they had the votes to block its passage.

Chief News Editor: Sol Jose Vanzi

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