Oil firms belie accusations of overpricing

MANILA, Philippines - Oil companies on Tuesday said pump prices are not overpriced as claimed by a lawmaker. In a press conference on Tuesday, oil industry participants said the computation of Senator Manuel “Mar" A. Roxas II that diesel pump prices are overpriced by P11 per liter and gasoline by P10 was incorrect. Pilipinas Shell Petroleum Corp. Country Chairman Edgar O. Chua said the computations did not factor in other items such as margins to dealers, fuel additives like coco methyl ester for diesel, and market competition. He also explained that oil companies have a 30-day lag pricing as inventories last for a month. Oil firms have also denied allegations of profiteering given the low world oil prices, noting the constant “small" price cuts. After a peak of $147 per barrel, oil prices have plunged to $4 due to the slowing global economy. Pump prices have gone down to P34 from P60 per liter for gasoline and P35 from P50 for diesel. “We expect a minimal profit of P200 million or even a negative [position] if oil prices go down further, Mr. Chua said. “We are expecting to incur losses of around P1 billion since we were selling products at a loss," Chevron Philippines, Inc. Country Chairman Randy Johnson said. Earlier, listed Petron Corp. announced it is expecting a P2-billion loss in net profit this year due to falling oil prices. Independent Philippine Petroleum Companies Association President Fernando L. Martinez of Eastern Petroleum Corp. said small oil firms may also suffer the same fate as their major counterparts. — BusinessWorld