With oil price adjustments surging higher than projected, the Department of Energy (DOE) has summoned the oil companies to explain the ‘excess’ in cost escalations that they will be reflecting at the pumps by Tuesday, March 15.
Energy Secretary Alfonso G. Cusi stated ‘we are asking the oil companies to explain;” primarily for diesel prices which will be on uptick of P13.15 per liter, which would be higher by more than P1.00 per liter than the projection of about P12.00 per liter, as anchored on the Mean of Platts Singapore (MOPS) cost swings.
For gasoline, the price increase this week had been pegged at P7.10 per liter; which is well-within estimates; while kerosene prices will rise by P10.50 per liter; which is also roughly P1.0 per liter higher than forecasted.
It was major player Pilipinas Shell Petroleum Corporation that first advised on its price hikes to the DOE; and given the shocking price uptrends, the agency was prompted to demand an explanation from the industry player.
As of press time, the other oil companies have not announced their price adjustments yet or if they are planning to stagger the increases that will be due at the pumps this week.
The energy department has called the oil firms for a meeting 3:00pm on Monday (March 14) so they can throw light on the basis of the price increases that they will be implementing – the 11th in the series of price hikes this year.
When asked on the ‘higher-than-calculated-adjustments’, the oil companies indicated that what was integrated in the estimates had just been the outcome of trading days last week in the international oil markets as anchored on MOPS indices; but that had not factored in yet the biofuel costs component; the depreciation of the Philippine peso versus the US dollar; as well as premium charges and freight costs.
Apart from razor-sharp focus given on accelerating prices at the pumps, the oil companies are likewise asked to account for their minimum inventory requirement (MIR) and for them to apprise the government if that scale of supply will be enough if the Ukraine-Russia war will linger on.
Senate Committee on Energy Chairman Sherwin T. Gatchalian, in particular, is proposing increase of MIR from 30 days to 45 days, so the country could have supply buffer of 15 days.
The senator has recommended that “the government should subsidize the carrying cost because when these companies buy another 15 days, they have to pay for interest,” with him adding “that's where the government comes in terms of energy security.”
Beyond these measures, Gatchalian has similarly prodded on the DOE “to exercise its mandate insofar as going after those engaged in profiteering activities by moving for the investigation and eventual prosecution of abusive retailers as well as revocation of licenses if warranted.”
For the department to effectively implement its policing mandate against profiteers, the lawmaker further urged that the DOE must set up “active hotlines to enable consumers to immediately report those imposing unreasonable price increases and deploy those in the field offices to verify the information on the ground.”