Increased demand in the US for oil products pushed up the local prices of diesel and kerosene by P1.55 per liter and of gasoline by P0.85 per liter effective Tuesday, the Department of Energy announced.
Oil companies Pilipinas Shell Petroleum Corp., Flying V, Seaoil Philippines, PTT Philippines, Phoenix Philippines, Unioil advised the DoE of the price increase. Other oil companies are expected to follow suit.
Seaoil’s advisory adjusted pump prices per liter effective 6 a.m. as follows: gasoline, up P0.85 per liter, diesel, up P1.55 per liter, and kerosene, up P1.55 per liter.
“This is to reflect movements in the international petroleum market,” Seaoil said.
Energy Undersecretary Felix William Fuentebella said oil prices went up due to the bigger demand from the US and uncertainties arising from the Organization of Petroleum Exporting Countries meeting last month.
Fuentebella, meanwhile, said the department’s Mindanao field office is addressing concerns of oil smuggling, predatory pricing and the selling of petroleum products per bottle.
He said the department is coordinating with local government units against the unauthorized retailing due to consumer safety concerns.
Fuentebella said the Finance department and Bureau of Customs are helping the DoE determine if there is oil smuggling.
“We are tightening inter-agency coordination to address smuggling,” he said.
Fuentebella said the department is also discussing allegations of predatory pricing by some oil companies.
“We just received letters but no formal complaint was lodged against other oil players,” he said.
The department previously asked the oil players to explain unusual price reductions in gasoline products in Mindanao which could breach provisions in the law.
“While price rollbacks like this are a welcome development for the consumers, the DoE cautioned that sudden and sustained huge decreases in oil prices might qualify as “anti-competitive behavior” under the Oil Deregulation Law,” the agency said.
“This market behavior puts both smaller oil players and consumers at a disadvantageous position in the long run. Smaller oil players may actually lose its market share and end up closing, thus remaining oil players may have the chance to dictate prices to the detriment of the consuming public,” the DoE said.
“Currently, the DoE-Mindanao Field Office has already been coordinating with local government units concerned and the Bureau of Fire Protection to eliminate the selling of oil products in bottles that may endanger public safety and health,” it said.
The department is also in talks with Customs regarding alleged smuggling of oil products as this may hurt not only the oil industry players, but also the economy of local government units in Mindanao and around the country due to unpaid taxes.
“Moreover, the DoE is closely coordinating with the Department of Justice for the possible convening of the DoE-DoJ Task Force as necessary to look at any violations of the law,” it said.
The 1998 Republic Act 8479 states that aside from caramelization—which means any agreement, combination or concerted action by refiners, importers and/or dealers, or their representatives, to fix prices, restrict outputs or divide markets, either by products or by areas, or allocate markets—predatory pricing is also prohibited.
Predatory pricing means selling or offering to sell any oil product at a price below the seller’s or offeror’s average variable cost for the purpose of destroying competition, eliminating a competitor or discouraging a potential competitor from entering the market, “provided, however, that pricing below average variable cost in order to match the lower price of the competitor and not for the purpose of destroying competition shall not be deemed predatory pricing.”
The law stated that any person violating the provision will be fined from P1 million to P2 million and sentenced to three to seven years’ imprisonment.
