Oil inventories showed supply jumping from 6.3 million barrels to 413.06 million in end-January
Research group IBON questioned the recent increases in local oil prices, citing a US energy agency report that the global supply of crude oil has reached a new record high.
Philippine oil prices increased for the second time in two weeks: local pump prices rose by a total of Php3.90 (Php2.40 and Php1.50) per liter of gasoline, Php3.05 (Php1.90 and Php1.15) per liter of diesel and Php3.30 (Php2.15 and Php1.15) per liter of gasoline. The Department of Energy (DOE) cites a reported drop in US oil drilling rigs, a cutback in the exploration budgets of energy firms and even workers’ strike at several US refineries and chemical plants as reasons behind the hike.
US-government-run Energy Information Administration however reported that oil inventories showed supply jumping from 6.3 million barrels to 413.06 million in end-January. Traders also attest to a sustained interplay between abundant gasoline supplies especially coming from North Asia on one hand, and poor demand on the other hand, that caused cheaper global oil prices in the recent months. Relatedly, Saudi Aramco sold oil in officially lower prices to Asia in order to stay competitive in the region.
IBON noted that even though global oil prices have been lower last year, there are indications that local oil prices have not gone down by as much as they could have. The price of benchmark Dubai oil in Philippine pesos was Php2,699 barrel in December 2014 (US$60.39 per barrel at an average exchange rate of Php44.69 per US$1) which was close to its Php2,728 price per barrel in May 2009. The DOE however reported a common pump price for diesel of Php31.40 and Php42 for gasoline in mid-December, which were slightly higher than their prices in May 2009 (Php30.46 for diesel and Php36.25 for gasoline). The group said that while this is only an approximation, the discrepancy can be noted in line with observations of domestic overpricing by oil firms.
IBON also said that despite slowing inflation because of cheaper global oil, the prices of basic goods still rose significantly especially in the case of rice, some vegetables and other basic goods. For instance, the price of regular milled rice, ampalaya and cooking oil rose from from December 2013 to December 2014—from Php36 to Php40; Php50 to Php70, and Php25 to Php26, respectively.
The research group reiterated its criticism of the oil deregulation policy, which invokes free competition among oil companies to supposedly pull oil prices down. The deregulation of the oil industry has effectively relieved government from actively looking into an optimal facilitation of the country’s oil resources in response to the people’s and the nation’s needs, and given free rein to oil companies to reap profits through overpricing. (end)