Angelo Reyes gags oil firms on price hikes

By Euan Paulo C. Añonuevo, Reporter

Energy Secretary Angelo Reyes ordered oil companies to desist from disclosing to media future fuel and cooking-gas price hikes.

During a stakeholders’ meeting Wednesday organized by the Department of Energy, Reyes said the oil firms should stop making early announcements on price increases so as not to cause undue panic and anxiety on consumers.

“It will not serve anybody any good if they will make announcements based on their own projections,” he added.

Reyes’ order came about after media clarified whether his earlier remarks lambasting Arnel Ty, head of Liquefied Petroleum Gas Marketers Association, during the meeting meant a stop to early price-increase announcements.

The Energy chief had castigated Ty for being too open to media about the group’s future price adjustments—a practice not common among larger oil firms—such as the P3.50 per kilogram increase that the marketers association tagged on its liquefied petroleum gas products a week ago.

The cooking-gas retailers’ adjustment was announced much early on while big oil companies made their own public announcements only a few hours before implementing their own price hikes.

In front of media, transport groups and officials of the government and oil firms, Reyes told Ty that he “should not speak for everybody” and that his group should instead be “competing with each other [in the group].”

He said the marketers’ association is “increasing prices ahead of everybody” and is also in the forefront when cooking-gas prices go down just to look good in public.

But Ty said his group’s cooking-gas price for its 11-kilogram cylinders, which costs about P610 each, is not enough to influence prices as it is still the lowest in the industry.

Under the Downstream Oil Industry Deregulation Act of 1998, oil firms are allowed to automatically increase their pump prices but are not compelled to announce such move to the public.

But the Energy department requires oil companies to inform the department within one day, but not less than six hours, of any move to increase prices and any public announcements related to this.

Despite the public berating, Ty later told media that his group will comply with the Energy secretary’s order but stood by the legality of the group’s price adjustments, which he said can be attested to by their supplier, Liquigaz Philippines Corp.

“The [Energy department] knows best. We will just follow it first,” he said.

Ty added that the marketers association will also be attending future meetings organized by the department to come up with a system for making announcements on price adjustments.

Other oil company officials present during the industry meeting deferred to Reyes’ order, saying that making early disclosures on price adjustments may lead to hoarding of petroleum products.

Rate adjustments ‘reasonable’

Ironically, while Reyes questioned the Ty group’s price adjustments, a report released during the meeting by Peter Lee U, University of Asia and the Pacific School of Economics dean, found that price adjustments implemented by the oil firms are “reasonable.”

The study, which was commissioned by the Energy department for a pittance, however, focused only on Petron Corp. and Pilipinas Shell Petroleum Corp.’s price adjustments from December 2006 to November 2007. The two firms represent 70 percent of the total petroleum market in the country.

“Oil price increases have been reasonable. They were not out of line and are consistent with what they are saying that they have under-recoveries,” Lee U said.

He added that while many analysts are saying that oil prices may continue to stay at high levels abroad, the best protection government can offer to consumers is to have the petroleum industry be more open to new players to spur competition.

“The country needs a credible competition policy with an enforcement agency,” Lee U said.(ManilaTimes)

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