Why are fuel prices set every Tuesday

Oil companies will implement another big-time pump price hike starting Tuesday amid the ongoing conflict in the Middle East, which has caused disruptions in global oil supply.

But why are fuel prices set every Tuesday?

Speaking to Super Radyo dzBB on Tuesday, Department of Energy (DOE) Secretary Sharon Garin explained that this was what they had agreed on with fuel companies.

“Napagkasunduan kasi ‘yan in the industry with DOE previously na every Tuesday lang ‘yung change (price). Before kasi everyday ‘yan, iba-iba ‘yung system,” Garin said, adding that it is part of the agency’s monitoring.

(DOE and oil firms agreed that changes in petroleum prices would be implemented every Tuesday. Before that, it used to be every day and the system varied.)

“‘Yun ang kasunduan. Because of the problem right now, nag-issue kami ng mga directives to these oil companies kung ano dapat ang gawin. One of those is walang unreasonable increases ng presyo,” she said.

(That was the agreement. Because of the problem right now, we issue directives to oil companies on what they should do. One of those is that there should be no unreasonable price increases.)

The weekly oil price adjustment is also connected with the replacement cost, Garin explained.

“Ang agreement is replacement cost kasi halimbawa, nabenta nila this week, kailangan nilang bumili for next week, ‘di ba? So may formula nang na-create within the industry together with DOE na kung magkano ‘yung replacement ng ibinenta mo, ‘yun ‘yung adjustments na ginagawa,” she said.

(The agreement is the replacement cost. For example, if they sell it this week, they will need to restock for next week. So a formula was created within the industry together with the DOE to determine how much the replacement cost of the oil being sold, and that’s the basis for the adjustments being made.)

Garin reminded oil companies that violating the directive could lead to the revocation of their permit to operate.

“If you do not follow the directive ng DOE na nagbigay sa ’yo ng permit para mag-operate ka ng gasolinahan, then we will cancel your permit,” she said.

(If you do not follow the directive of the DOE that gave you the permit to operate a gas station, then we will cancel your permit.)

Garin also expressed support for amending the Oil Deregulation Law, particularly on the unbundling of oil prices.

“We just want to understand na tama ’yung computation (that the computation was right) and avoid any doubt of cartel,” she said.

Since the Middle East conflict escalated, the country's stock of petroleum products could last for 57 days, Garin said.

The conflict in the Middle East has severely impeded the shipping of petroleum products in the Strait of Hormuz, which is considered the world’s most vital oil export route.

The Gulf connects the biggest Gulf oil producers, such as Saudi Arabia, Iran, Iraq, and the United Arab Emirates, with the Gulf of Oman and the Arabian Sea.

According to data released by DOE, retailers are set to increase prices per liter of gasoline by P7.00 to P13.00, diesel by P17.50 to P24.25, and kerosene by P32.00 to P38.50. — Mariel Celine Serquiña/BAP, GMA Integrated News