Oil price hike: let's do the math

(Following is the transcript of the segment "Analysis by Winnie Monsod" which aired on News on Q on November 18, 2010. Prof. Winnie Monsod is the resident analyst of News on Q which airs weeknights at 9:30 p.m. on Q Channel 11.) Marami ang nagtatanong: Ito bang latest oil price hike ay may kinalaman sa pagsasara ng FPIC pipeline at kakulangan ng supply lalo na sa Metro Manila? You know what my usual answer is: let's do the arithmetic. May tinatawag na rule of thumb to compute how the changes in the international prices of petroleum products can be translated into domestic price changes. Ayon sa oil monitor ng DOE, tumaas nga ang presyo last week ng mga petroleum oil products from their prices two weeks ago. Gasoline went up by more than $3 a barrel, and diesel by more than $5 a barrel. Mas specific ang datos na nakuha ho ko based on my independent research. Diesel prices last week actually went up by $5.176 a barrel from their prices two weeks ago, and gasoline went up by $3.381 per barrel. Kerosene by $4.617 per barrel. Okay. Ano ang rule of thumb na ginagamit ng mga major players like Shell? Simple lang. Step 1: Start with the increase or decrease in the international price between last week and two weeks ago. That is quoted in $/barrel. Step 2: Multiply that by the average peso-dollar exchange rate for last week, to get the Peso/Barrel equivalent of the price change. Step 3: To get the Peso /Liter increase, we divide the Peso/Barrel change by 159, because there are 159 liters in a barrel. Step 4: We then multiply this by 1.12 to get the equivalent increase inclusive of VAT, which is 12%. Gawin natin ngayon ito para sa diesel: $5.176 per barrel times P43.442 divided by 159 times 1.12 equals P1.58 per liter. Para sa Kerosene: $4.4617 times P43.442 divided by 159 times 1.12 equals P1.365 per liter. Para sa Gasoline: $3.381 times P43.442 divided by 159 times 1.12 = P1.03 per liter. Mag-add tayo ng 6 centavos per liter for transportation cost, which makes the indicated price increase to be: Diesel: P1.64 Kerosene: P1.42 Gasoline : P1.09 Ngayon, let us compare that with the announced price increases: Ang unang nag-announce na tataas ang presyo starting Tuesday at 12:01am was Pilipinas Shell. Shell increased diesel and kerosene prices by P2 per liter,and gasoline prices by P1.50 a liter. I -side by side natin po : For Diesel -- the Actual Price Increase is 2 pesos; the rule of thumb computation is one peso and sixty four centavos. For Kerosene -- the actual price increase is 2 pesos; the rule of thumb is one peso and forty-two centavos. For Gasoline -- the actual price increase is 1 peso and fifty centavos; the rule of thumb is one peso and nine centavos. Ano ang conclusion natin: The price increases of the oil companies are obviously greater than what would be indicated by the changes in international prices of petroleum products, hindi po ba? Which means that these domestic price increases must reflect also -- at least for Shell and Chevron, their increased costs due to the closing of the pipeline, not to mention the shortages, because not enough products can be transported through the alternative methods being used by Shell and Chevron. Unfortunately, it looks like the rest of the industry, are benefiting from this situation, because they are matching the prices of Shell and Chevron. Nakikigaya na lang ang iba, which means ang laki ng profit nila, hindi po ba? Ang pinagdidiinan naman ng mga kumpanya ng langis -- walang kinalaman ang pipeline leak sa oil price hike. Base sa ating komputasyon... kayo na ang humusga. Tandaan, maging mapanuri, kilatisin ang mga isyu, ako po si Winnie Monsod on Q.