The Department of Energy (DOE) sees no irregularity in petroleum product prices in Palawan, despite the fact that they appear to be higher in comparison to other provinces in the country.
DOE gave this explanation on October 4 at the VJR Hall of the Capitol during a consultative meeting and focused group discussion with the provincial government and other officials of local government units (LGU) in the province.
The statement was also in response to several queries and reactions regarding the increase in fuel prices in the province. In February of this year, provincial government officials said that local fuel prices were about P5 per liter too high. Since then, they have asked gas stations to lower their pump prices.
DOE-Oil Industry Management Bureau Assistant Director Rodela I. Romero, however, stated that while fuel prices in Palawan are relatively higher compared to the National Capital Region, it does not necessarily mean overpricing.
She said fuel prices vary in each region because of the oil deregulation law and due to the fact that the country’s petroleum products are imported.
“[That is] the reason kung bakit ang DOE ay naka-subscribe sa Mean of Platts Singapore dahil yun ang benchmark na ginagamit ng ating mga oil companies,” Romero stated.
“Ang oil industry natin ay deregulated pero hindi sa standards ng quantity and quality kaya meron tayong issuance doon. Deregulated sa price so market forces ang umiiral. Kaya sabi ko nga, 100 percent imported, so any developments na nagco-contribute para mag-increase ang price, apektado tayo,” she added.
Romero also stated that the supply-demand ratio plays an important role in the price of oil in the world market, which is also affected by other factors, one of which is the war that Russia waged against Ukraine.
She said despite the fact that the Philippines does not purchase oil products from Russia, its supply of around 2.5 million barrels of oil per day affects the international market.
“Ang supply ngayon ay 101 million barrels per day, ang demand kung minsan mas mataas pa sa 100 million barrels per day. Plus the fact na maraming nagco-contribute sa adjustment – number one is the geopolitical conflict between Russia and Ukraine,” Romero stated.
“Anong kinalaman natin e hindi naman tayo kumukuha ng crude (oil) sa Russia? Dahil maliit lang ang diperensya ng supply at demand, so kapag Nawala yung 2.5 million barrels ni Russia sa mercado, magkukulang na ang supply. So definitely, fundamentals of supply and demand—pag mataas ang demand, mataas ang presyo,” she explained.
She also noted that prices of fuel in different localities vary because of competition between oil players, adding that prices differ based on situations and that even the same companies sometimes have different prices.
“Bakit iba-iba ang presyo sa bawat locality? Gaya sa Manila, meron din tayong tinatawag na price war, pamurahan or maraming mga freebies na ino-offer yung mga oil companies. Sabi nga natin, there’s a power of choice sa mga consumer,” she said.
“For instance Petron, magkakaiba rin yung presyo ng bawat station kasi iba yung situation doon sa particular trading area. May lugar na captured yung market for instance, the one in front of NAIA terminal 3, nag-iisa lang sya doon at walang kakompitensya so mas madalas, mataas ang presyo. Meron din sa kahabaan ng Commonwealth Mandaluyung na maraming players ang nagco-compete so iba rin ang presyo,” she explained.
She also mentioned a situation somewhere in Camarines Sur where an independent player has a lower operating cost yet the price is also near the range of other major players, which she described as “matching that is also part of competition.”
“Hindi rin naman natin masasabi na profiteering lahat kasi, on the part of the oil companies, pare-pareho yung benchmark nila, pagdating sa cost pare-pareho yung adjustment kaya lang pag dinistribute na sa iba’t-ibang locality, nandoon yung competition,” she said.
She went on to say that distance no longer makes a difference in how prices are set.
“If that will be an issue, then prices in Batangas or in Bataan would be lower because of the refineries there. Ang talagang factors affecting prices is the situation in the locality, particularly the competition particularly from the local players,” she said.
She also said they have not received any complaints about overpricing and what they get is more of the report on predatory pricing, where some companies lower their prices to kill the competition.