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WITH last week’s surprise rollback, the public is wondering, where
were the oil companies’ supposed underrecoveries? Have they
suddenly evaporated the same way that people’s purchasing power
has diminished with every acceleration in inflation?
These questions are apt, as the price adjustment
came within days after oil hit fresh highs in the world market.
Usually, local retailers respond to such a surge by immediately
raising, and not reducing, prices at the pump.
Last we know, they have yet to recover about P6
from the recent spike in world prices. Given the industry-wide
rollback, we are concerned that retailers have been using
underrecoveries—if they existed at all—as an excuse to gouge the
public.
We have Flying V to thank for last week’s
unprecedented reduction in the price of gasoline across industry
players. The small player broke ranks from the Independent
Philippine Petroleum Companies Association (IPPCA), and announced
its price cut.
All of a sudden a small industry player became a
market mover, forcing not only fellow members of IPPCA, but also the
Big Three—Petron, Shell and Caltex—to reciprocate with their own
price reductions. Other IPPCA members were more than surprised at
the maverick Flying V. Indeed, at least one peer in the industry was
visibly irked.
As Flying V’s chief executive explained, his
company has managed to eke out modest margins from selling gasoline,
thus the company’s move to reduce prices. This is another
revelation. If such a small player with a negligible share of the
domestic market has managed to squeeze some gains from the series of
price increases since April, then imagine how the Big Three must
have been doing all this time.
This is why we have been ranting in this column
about their haste in raising prices at the pump every Friday, moving
like thieves in the night and jacking up prices just when most
motorists are either winding down after a hectic week or already
fast asleep. Do these companies honestly think they’re doing
Filipinos a service by implementing their own version of midnight
price madness?
Imagine waking up on a weekend to discover that
gasoline became more expensive overnight. The word anger cannot
fully capture how Filipinos have been feeling during those Saturday
mornings.
Unfortunately for the lot of us, the Downstream
Oil Industry Deregulation Act has all but emaciated consumers in
this country. A perfect piece of free-market ideology, that law has
turned the Department of Energy into a mere bean counter, monitoring
oil prices for whatever good that would do the public.
But last week’s unprecedented rollback should
provide consumers and the government some ammunition to probe into
the true state of affairs in the local oil industry, and how
companies have been faring—or, should we say, thriving—amid the
skyrocketing price of oil worldwide. The government should take
advantage of this rare crack in the industry’s ranks, and closely
look into those supposed underrecoveries.
Exactly what do oil companies mean when they
have underrecoveries? Are they really talking about costs? Or do
they mean profits? If the latter, then the government should find
out if these companies have been skimming the public.
The law may allow these firms to earn decent
margins. But we don’t think it sanctions their making a killing
especially during these difficult times. Just in case it does, then
our legislators should take their cue.
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