WHO WILL RAISE GAS PRICES FIRST?

WHO WILL RAISE GAS PRICES FIRST?

MANILA, NOVEMBER 17, 2009 (STAR) By Donnabelle Gatdula - Motorists line up in a gasoline station in Calamba, Laguna to get their fuel supply. Gasoline stations in some towns were closed for days with operators citing a supply shortage from their main distributors.

Following the lifting of Executive Order 839, oil companies are waiting to see which one will make the first move to increase pump prices.

Independent Philippine Petroleum Companies Association (IPPCA) chairman Fernando Martinez, who also owns Eastern Petroleum Corp., said the firm was not yet planning to increase prices.

President Arroyo signed last Sunday Executive Order 845, officially lifting the price cap on petroleum products even as Palace officials warned oil firms yesterday that the government and the public would monitor their business operations.

Mrs. Arroyo issued the EO to revoke EO 839 that froze pump prices to their Oct. 15 levels to help the people recover from the destruction caused by recent devastating typhoons.

Asked if Eastern would adjust prices after EO 839 was lifted, Martinez replied, “Not yet.”

Unioil Philippines Inc. also said, “We did not implement any adjustment in our pump prices. Our pump prices are still the same.”

Petron Corp. public affairs manager Virginia Ruivivar said the country’s largest oil refiner is also not keen on making the first move.

“I do not think we will move today (Nov. 16). Otherwise, I will get an advice from the management,” she said.

Ruivivar stressed that normally, Petron has just been responding to competitive pressures.

Just in case, there would be price adjustments, Ruivivar assured the public that it would be done on a staggered basis.

Martinez said they might raise prices ranging from P1 to P1.50 per liter on a weekly basis.

President Arroyo had issued EO 839 directing oil companies to keep their prices at Oct. 15 levels for the duration of the state of calamity over Luzon after the devastation caused by tropical storm “Ondoy” and typhoon “Pepeng.”

The order drew sharp criticism from the oil firms as well as the various business groups because of the indefinite period in which the price freeze would be in place.

Oil industry sources disclosed yesterday that some oil companies are forced to close several service stations due to losses in revenues caused by the implementation of EO 839 that mandated a freeze of pump prices in Luzon following the devastation of the recent typhoons.

Sources said several stations in Metro Manila have decided to close because of the dealers’ inability to absorb the losses brought about by EO 839.

The President said she removed the price cap based upon the recommendation of the joint Department of Energy (DOE)-Department of Justice (DOJ) Task Force and the adoption of measures proposed by oil industry players “for a more targeted and focused calamity assistance program in selected areas in Benguet, Baguio City, Pangasinan, eastern Laguna, Rizal, Ilocos Norte, Ilocos Sur, Mountain Province, Isabela, Cainta, Marikina City, Malabon and Pasig City.”

The President specifically named Petron Corp. and Seaoil as among the oil firms that would implement discounts and pro-poor projects in the areas still recovering from the disasters.

She tasked the DOE and the DOJ to help in implementing the package of proposals of the oil firms.

Presidential economic spokesman Gary Olivar and deputy presidential spokesman Anthony Golez expressed hopes that the oil firms would keep the promises they made in exchange for lifting the EO, including implementing discounts, staggering their increases, and putting in more investments.

“We hope they keep their vows so it will not be shocking to our countrymen,” Golez said.

Olivar said the issuance of EO 839 was justified “and showed that we really should be vigilant or they should exercise more self-control themselves.”

He said the Bureau of Customs had given Shell a deadline to pay over P7.3 billion in unpaid taxes for the importation of unleaded gasoline.

“These (unpaid taxes) should be a reminder to them (oil companies) that even as they continue to pursue their profit maximization activities… they should also be aware at all times that the public interest will be actively and aggressively protected by this President,” Olivar said.

“This is the kind of thing, I mean, it’s okay in general postpone taxes but to actually avoid taxes that’s illegal. That’s exactly what I mean by exploiting the situation,” he said.

Justice Secretary Agnes Devanadera said Malacañang would count on the commitment made by the oil firms to implement discounts.

Devanadera said that there is no law binding the oil companies to give discounts now that the government has returned to its oil deregulation policy even if relief packages are included in EO 845 that lifted the price freeze.

“We welcome the lifting of EO 839, and as we have committed to the government, we are prepared to implement a program to assist our countrymen in areas that were directly affected by the recent calamities. We will offer price discounts on gasoline, diesel, kerosene and cooking gas (LPG) in identified areas until the end of November,” said Petron president Eric Recto.

Recto said the firm would also freeze the prices of automotive and motorcycle lubricants until Dec. 31.

Shell vice president for communications Roberto Kanapi said the firm would issue an update on any price adjustment today.

Shell country chairman Edgar Chua welcomed the lifting of EO 839. “This sends a positive signal to both the local and international business communities,” Chua said.

He also vowed to cooperate with the government to ensure an adequate supply of oil in the country.

Meanwhile, Isabela Rep. Rodolfo Albano III accused oil companies yesterday of resorting to profiteering by increasing pump prices even before the President could lift the oil price freeze.

He said Petron, Shell and Chevron (formerly Caltex) gasoline stations in Isabela have already increased gasoline prices ranging from P4 to P5 per liter.

“In some towns, where there are only a few stations that still sell oil products, the increase is as much as P8 per liter,” he said.

Albano said oil companies and their dealers are taking advantage of an artificial shortage they themselves created and making a killing at the expense of the public.

He urged the Department of Energy and the Department of Justice to monitor price increases of petroleum products especially in the provinces.

Albano said that along Commonwealth Avenue and the Batasan-San Mateo Road in Quezon City, gasoline stations limited the sale of gasoline to P1,000 worth of gas yesterday morning, and by noontime the same stations claimed they had run out of diesel.

He said it is possible that oil firms are hoarding their products in anticipation of higher prices.

In a related development, former economic planning secretary Ralph Recto said his assertion that local oil products are overpriced by as much as P8 per liter is not baseless.

In an email to reporters, Recto said the technical staff of the National Economic and Development Authority (NEDA) made the computation.

“My contention is not without basis. The NEDA technical staff used a method of comparison and computation to arrive at an estimate of how much fuel prices should be in April of this year,” he said.

He pointed out that at the time, oil companies were selling gasoline by as much as P40.85 per liter, P8 more than the estimated gasoline price of P32 based on NEDA computations.

Lawmakers warn oil firms

Speaker Prospero Nograles warned erring oil companies not to create an artificial shortage of petroleum products or the government could take over the oil facilities in a worst-case scenario.

In a text message from Las Vegas, Nograles said a government takeover is logical and necessary if the shortage - perceived by many as artificial – gets worse, amid the government’s decision to lift EO 839 that sets an oil price cap.

“That (government takeover) is perfectly legal,” he told The STAR.

Nograles also hinted that it would be best if somebody who could do the job better would replace Energy Secretary Angelo Reyes, who has been accused of acting as a lawyer of oil firms.

“This business scheme (artificial shortage) can stop if our energy officials will only run after them. The remedy is simple. The government should put the people who can really handle the job,” Nograles proposed, without elaborating.

“Secretary Angie (Reyes) could have at least called up these oil companies and appealed for compassion. Millions of people have lost their homes and are largely dependent on whatever support that is given to them by others,” he said, referring to typhoons Ondoy and Pepeng.

“This makes me wonder if the DOE is still part of the government,” Nograles said.

Pampanga Rep. Juan Miguel “Mikey” Arroyo, chairman of the House committee on energy, observed the pattern wherein oil companies have been hoarding petroleum products on the eve of an impending oil price hike.

“The practice of hoarding every time there is an impending oil price increase is becoming so irritating. This has to be stopped. I am exercising the oversight function of the House energy committee to monitor this exploitative practice of oil companies,” he said.

He called on the DOE and the Department of Trade and Industry to check on reports of incidents of hoarding.

Anak Mindanao Rep. Mujiv Hataman said a House probe might be necessary to find out if oil companies are just trying to fool the public into believing that there is indeed a shortage, even if there is none. With Paolo Romero, Jess Diaz, Delon Porcalla, Edu Punay

Stable consumer prices during holidays vowed By Ma. Elisa osorio (The Philippine Star) Updated November 17, 2009 12:00 AM

MANILA, Philippines - Supermarket owners said yesterday are willing to temper any price increases for basic and prime commodities at least until after Christmas, in response to the government’s call for them not to take advantage of consumers.

“For the sake of those affected by the typhoons that hit our country, we will try to do our best to control increases until after Christmas,” Federico Ples, secretary-general of the Philippine Association of Supermarkets Inc. told The STAR. ““We have already reduced our margin to only three percent to five percent net.”

Prices of meat items, canned goods and refined sugar are expected to go up with the government’s lifting of price controls.

Ples said they expect price increase in refined sugar, canned goods and meat items. He explained that the government-declared standard retail prices (SRP) for these products during the period of price control were too low.

Ples said that the SRP then for sugar was at P38 per kilo as against manufacturing cost of P41 per kilo. “Maybe they will deliver, depending on the wholesaler, at P42 per kilo or P42.50 and we will add P.50 per kilo,” he said.

Weeks ago, there was a shortage in the supply of refined sugar in supermarkets as manufacturers refused to deliver at the SRP. Ples said that they expect the shortage to be corrected in the coming days as the price has been adjusted to acceptable levels to manufacturers.

The price of sardines, corned beef and other canned meat on the other hand might go up by three percent to five percent. “They cannot price these products too high also because of keen competition,” Ples pointed out.

As of yesterday, Ples said there was still no increase in supermarket prices because they had not received yet copies of the Executive Order lifting the price freeze.

“The price control is not yet lifted because when we were called in Malacañang last Friday, they said that they would release an EO lifting the freeze. We haven’t received it so there are still no price adjustments for supermarkets,” Ples said. He said that they expect to receive the EO today.

He noted that there is no need to immediately raise prices because the supermarkets still have inventory from the old prices.

Meanwhile, Philippine Amalgamated Supermarkets Association Inc. (PAGASA) president Steven Cua said prices will not automatically go up with the lifting of price controls.

“Prices should not go up immediately after the lifting. In fact, some supermarkets need not adjust their prices,” Cua said in a telephone interview.

He said he has written his member supermarkets and advised them to “please be patient.”

Cua explained that the prices should only go up for those whose SRP was below cost like sugar and corned beef.

Also, he said some supermarkets with higher overhead costs are likely to raise their prices. “Consumers have a choice. They can go to high-end supermarkets or not. I advise them to choose the supermarkets they go to.”

Chief News Editor: Sol Jose Vanzi

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