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OVER the
past year, local pump prices have already increased by
more than 50 percent, according to the estimates of
independent think tank IBON Foundation, highlighting the
urgency for the government to regulate the oil industry.
IBON
said in a statement that between June 2007 and June
2008, the average pump prices of unleaded gasoline and
diesel have increased by 47 percent and 52 percent,
respectively.
Further,
since the start of deregulation in 1996, pump prices of
unleaded gas have increased by 492 percent, while prices
of diesel have increased by 607 percent.
“Oil
deregulation was supposed to ensure affordable and
accessible petroleum products by breaking up the local
oil cartel, allowing ‘market forces’ to determine the
real price of oil. Instead, it only gave Shell, Petron
and Chevron [formerly Caltex], more room for speculation
and to dictate prices and price hikes,” IBON said. The
think tank said the dramatic increase in oil prices in
the country is not only due to soaring oil prices in the
international market but also due to the “profiteering”
of oil firms.
IBON
estimated that as much as 47 percent to 54 percent of
the pump price of petroleum products represents windfall
profits of the oil firms. “This profiteering only proves
that oil prices are artificially bloated at
international and local levels because of the dominance
of transnational oil firms over the industry, which
gives them the upper hand to practice monopoly pricing
and speculation,” IBON said.
The
think tank said that around P31 per liter of pump prices
in the Philippines could be deemed as windfall profits
of transnational oil firms.
This
assumption was based on an estimate of the real cost of
oil, which the think tank pegged at $31 to $32 per
barrel. This estimate, IBON said, already incorporated
exploration cost, production cost and royalties to the
Organization of Petroleum Exporting Countries.
The
think tank subtracted this from the May 2008 average
Dubai spot price of $117 per barrel showing that oil
firms may have already earned windfall profits of $86 to
$87 per barrel of crude oil.
When
applied to local pump prices, IBON said that for every
liter of unleaded gasoline, P26 to P31 goes to total
windfall profits and for diesel, P23 to P27 per liter
goes to profits.
This
estimation, IBON said, was made using 159 liters per
barrel and an exchange rate of P43 to $1. It also used
the prevailing pump prices as of June 14, 2008.
“An
effective way to break up the monopoly control of the
oil firms over the local downstream oil sector and
ensure affordable and accessible oil products is to
revoke the oil-deregulation law and give the government
regulatory authority over the oil industry,” IBON said. |
