THE continuous decline in world oil prices has prompted local oil companies to reduce its fuel prices by as much as P1 per liter for gasoline and P0.25 per liter for diesel.
Local pump prices went down as the average price of unleaded gasoline at the Mean of Platts Singapore (MOPS) dropped by $3 to $85 per barrel on February 12 from $88 per barrel in January, while MOPS-diesel dropped to $81 per barrel on the same day from $82 a barrel in January.
The Department of Energy (DOE) monitoring showed that the average price of Dubai crude—a common benchmark for refiners—dropped $72 a barrel on February 12 from $77 a barrel in January.
DOE added that the international contract price of liquefied petroleum gas (LPG) dropped to $735 a metric ton this month from $736.50 per MT in January.
On Monday Seaoil Philippines Inc. led the price cut by just slashing the price of gasoline by P1 per liter and diesel by P0.25 per liter.
Following Seaoil’s lead, Eastern Petroleum Corp., Petron Corp., Phoenix Petroleum Philippines Inc. and Pilipinas Shell Petroleum Corp. also reduced the prices of gasoline and diesel by P1 per liter and P0.25 per liter, respectively.
Also effective 12:01 a.m. today, Tuesday, Chevron (formerly Caltex Philippines) cut its nationwide wholesale posted prices for gold, silver, silver E10 by P1 per liter, regular and kerosene by P0.50 per liter, and diesel by P0.25 (value-added tax included). Price movements were attributed by Chevron to lower MOPS prices.
Oil company executives from other oil firms attributed the price cuts to the downtrend in the average prices of fuel in the world oil market.
Fernando Martinez, Eastern Petroleum chairman and chief executive, advised motorists not to expect fuel prices to continue its downhill slide. “Nothing remains certain with respect to world oil prices. In fact, oil prices were on an upswing during the last two trading days of last week,” he said.
Martinez said his company will just reflect the final outcome for the rest of the week.
Since January last year, oil companies have been reflecting in their pumps the weekly changes in the price of petroleum products in the world oil market.
In a press conference, Energy Secretary Angelo Reyes said the price cut implemented by oil companies reflect the reduction in world oil prices due to the reduced projected demand in the US and China.
“The impact of the reduced demand has impacted world oil prices, and is the reason oil prices dropped last week over the two previous weeks,” Reyes said.
The energy chief said DOE will continue to monitor local oil prices to make sure they reflect the oil-price movements in the world oil market.
In a related development, a source privy to the issue told the BusinessMirror the supposed reduction in the import duties of petroleum products to zero instead of 3 percent has yet to be implemented.
The source, who requested anonymity, said Reyes is set to meet with the Tariff Commission, Bureau of Customs (BOC) and oil companies to discuss and clear the bottlenecks that block the implementation of the said tariff cut.
The tariff cut, through Executive Order 850, which Malacañang issued on December 23, 2009, and was expected to reduce the cost of petroleum products by as much as P0.70 per liter, was supposed to be implemented in January.
EO 850 is part of the government’s commitment to eliminate the tariff rates on the remaining products on the inclusion list in 2010 under the Common Effective Preferential Tariff scheme for the Asean Free Trade Area (Afta) and the Asean Trade in Goods Agreement.
The source said the Afta countries include the Philippines, Indonesia, Malaysia, Thailand, Singapore and Brunei, or the Asean 6.
Among the issues that hinder the implementation, the source said, is the required form the BOC would have to check or validate with the source countries that have to be part of the six countries under the Afta.
“The BOC has to validate whether the imports come from the source countries within the Asean 6, otherwise the government could either lose revenues or do not get to conform with the agreement it entered with the Asean 6, if it just implements the tariff cut,” the source said.
Another issue, according to the source, is that DOE wants to check with BOC whether the tariff cut brought about by the EO is retroactive.
Reyes earlier said President Arroyo issued EO 850, which will reduce the import tariff of petroleum products to zero from 3 percent. EO 850 was issued to modify the rate of duty on certain imported articles as provided under the Tariff and Customs Code of 1976.
Reyes said the reduction in import duties will bring down prices of petroleum products by P0.70 per liter. “It [P0.70-per-liter impact] will balance or offset any price adjustment to be reflected owing to world oil-price trends. Effectively, the tariff rate collected by BOC from oil companies on their oil imports will be zero instead of 3 percent,” Reyes said.
