The group urged government to regulate the oil industry to ensure transparency in pricing. It also challenged oil firms to give additional information about their operations to show that the price of local oil is not beyond what is justified. “Only oil firms have full details of their operations. But under the oil deregulation law, oil companies are protected from disclosing these key information to the public, thus giving the oil firms more room to manipulate their prices” said IBON research head Sonny Africa, speaking before oil industry stakeholders and lawmakers on Wednesday in a forum at the House of Representatives.
The forum entitled “High Oil Prices: Seeking Solutions” organized by progressive partylist groups led by Bayan Muna and multisectoral alliance Bayan invited lawmakers and sectors most affected by oil price hikes to discuss the various bills and resolutions filed at the House of Representatives to reduce and control oil prices. IBON spoke on how local oil prices have been outpacing global crude prices as well as various estimates on local overpricing of petroleum products.
Africa explained that oil firms are charging the public more for diesel and gasoline noting that local and diesel and gasoline pump prices significantly outpacing global crude prices. The price of Dubai crude increased by an average of P0.15 per month while the pump price of diesel increased by an average of P0.22 per month over the January 1999-January 2011 period.
He added that diesel may be overpriced by 8 to 43 percent over the same period, where 8% assumes crude cost in a liter of diesel is equivalent to 1.3 liters of Dubai crude and 43 percent assumes a liter of diesel has 1 liter of Dubai crude.
“Unwarranted increases in oil prices hurt poorest consumers the worst with more expensive LPG, vegetables, fish, transport fares and other basic expenses,” Africa said. “It’s time for government to rethink the oil deregulation law and consider regulating oil prices for the sake of consumers.”
Important information that oil firms should make available include retail pricing formulas and strategies; overseas supply sources and terms of supply contracts; payments of local firms to mother firms; refinery stocks and capacity; inventories and storage capacity; and local sales and distribution to direct buyers, retailers and other oil firms.
Only effective state regulation of the oil industry will ensure transparency in the oil industry, which is an important step in ensuring cheap prices of petroleum products. Through regulation, these information can be publicly disclosed and verified, Africa stressed.
IBON Foundation, Inc. is an independent development institution established in 1978 that provides research, education, publications, information work and advocacy support on socioeconomic issues.