• Diesel prices down but kerosene up


    Oil companies will reduce the prices of diesel prices but will increase the cost of gasoline and kerosene on Tuesday.

    In separate advisories, Seaoil said it will lower diesel prices by 10 centavos per liter while Eastern Petroleum said it will reduce its rates by 15 centavos per liter.

    Seaoil, on the other hand, will increase gasoline prices by 20 centavos per liter while Eastern Petroleum will hike its rates by 15 centavos per liter.

    Seaoil also will also increase kerosene prices by 15 centavos per liter.

    The oil price adjustment will be implemented between 12:01 a.m. and 6 a.m. Tuesday.

    Eastern Petroleum said the latest price adjustments reflect the uptrend and downtrend in global gasoline and diesel prices.

    “Analysts say the crude oil markets are unlikely to fully rebalance until 2017 at the earliest and will be a major hurdle on the midstream sector,” Eastern Petroleum said.


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    1. Ricardo R. Pasco on

      Oil Price Increase
      We have no control in the prices of oil in the world market. What we can do is to lessen the bad effects of rising oil prices. One such unwanted effect is that when there is an oil price hike, prices of electricity, water and other commodities also increased but if there will be an oil price rollback subsequently, prices of electricity, water and other commodities will not be mutually rolled back. In short, oil prices were restored to their previous prices; why not other prices too (Please see last paragraph below)?

      Let’s put it in details; say for example last September 1, 2015, the price of oil is Php40.00/liter and on September 2, 2015, there is an oil price hike of Php3.00/liter so the oil price increased to Php43.00/liter. Relatively, prices of electricity and other commodities will also rise almost instantaneously. But let us again say for example that afterwards on September 8, 2015, there is a price roll back from Php43.00/liter to Php40.00/liter (let’s say due to a sudden drop of crude oil price in the world market), so the price of oil will be rolled back to their prices of September 1, 2015 but prices of electricity and other Commodities will not be rolled back to their former prices of September 1, 2015 meaning their prices will be higher and were not restored to their previous prices of September 1, 2015.

      This scenario is discouraging especially with the very frequent occurrences of price increases and roll backs. This lowers the buying power or capacity of the people since increases in wages could not match and cannot keep up with the very frequent oil price increase occurrences. To eliminate the said unwanted effect of oil price increase, oil prices should be kept stable or be kept constant or increases be kept to a minimum. One thing that can be done to achieve this is through some form of subsidy where this subsidy will be paid to oil firms to cover the oil price increase. Let’s call this subsidy “Oil Stabilization Fund”. This means that (from the example 2nd paragraph above) the Php3.00/liter oil price increase will be shouldered by the government by using a subsidy taken from the “Oil Stabilization Fund”. The “Oil Stabilization Fund” can be created and maintained through additional taxes or a new tax coming from the purchases of oil itself. As in the example (2nd paragraph) above, the price of oil should only be Php43.00 starting September 2, 2015. Instead, the actual selling price of oil or the price to be charge starting September 2, 2015 would not be Php43.00/liter but Php53.00/liter (this should be based on a government study on the subsidy amount that will be needed to keep the price of oil stable or constant over a long period of time). The Php10.00 difference (Php53.00-Php43.00) will be the new/additional tax and will be accumulated by the government (creating the oil stabilization fund) for the sole purpose of stabilizing the oil prices. As in the example (2nd paragraph) above, Let’s say in September 8, 2015, instead of a price rollback, there is again another oil price increase of Php2.00/liter (from Php43.00/liter to Php45.00/liter). The Php2.00 price increase will not be implemented since the government will pay for the increase through the oil stabilization fund accumulated from oil taxes above. Remember that the “Oil Stabilization Fund” is an advance payment by consumers on future oil price increases. Note: There might be a need to put up seed money or start up fund until such time that there is enough money in the fund to support its objective.

      Based on 3rd paragraph scenario in creating and maintaining the “Oil Stabilization Fund”, the actual selling price of oil will be higher by Php10.00 and appears to be disadvantageous to the consumers but essentially, there will be stability in oil prices over a longer period of time, thus, the unwanted effects of frequent oil price increases and price roll backs (as mentioned in the first paragraph above) will be eliminated or minimized. Salary computations will also be based on the Php53.00/liter not Php43.00/liter level of oil prices, so an undiluted and higher salaries could be expected.

      Also a real honest to goodness study on commodity price settings and its mechanisms (i.e. what causes selling price changes? What are the effects of price increases and decreases in oil, electricity, wages, taxes, raw materials, etc. to other commodities?) should be done so that prices can be controlled objectively, effectively and fairly. This will aid in an equitable commodity price computation and could lead to a lowering of prices to the September 1, 2015 level as in the case above (1st and 2nd paragraph).