The rollback of oil prices is woefully inadequate
The price rollback of 30 centavos per liter of gasolines and 20 centavos of diesel fuel this November is hardly sufficient. This was the third price rollback in two months. On October 11, oil companies implemented a 21 to 35 centavo price cut. They again reduced oil prices by 20 to 35 centavos on October 25. However, these niggardly price cuts are a far cry compared to the actual decline of crude oil prices in the world market. Together, they comprise only less than 3% of the overall price of petroleum products.
Crude oil prices in the world market have been dropping due to a slowdown in world industrial production and shrinking markets. Prices have dropped by almost a third since September, from $25 per barrel to only $17. Since last year, the price of crude has fallen by 34%, and by 50% since May 2001, when the Organization of Petroleum Exporting Countries enforced its latest production cutback.
According to the benchmark used by consumerists such as the Consumer and Oil Price Watch, which was based on the formula once used by the defunct ERB, every one-dollar price increase or decrease per barrel of Dubai crude correspondingly results in a 27-centavo price increase or decrease per liter of petroleum products in the country. Likewise, every one-peso increase or decrease in the peso-dollar exchange rate effects a 12-centavo price increase or decrease per liter of petroleum products.
Using this formula, prices of petroleum products should have been rolled back by no less than 60 centavos per liter this November. Since September, oil prices should have been rolled back by more than P2! Even then, these would constitute only 12% of the overall price of oil and constitutes only one-third of the reduction in the price of crude oil.
With the deregulation of the oil industry and the oil companies� insatiable greed for profits, the oil monopolies arbitrarily determine adjustments in the prices of petroleum products. Swift as they are in raising prices whenever they want, they are snail-paced when it comes to reducing prices. They grant such miserly and much-delayed price cuts in anticipation of another increase in world prices of crude oil. If at all, they cut prices only to avoid criticism and shield the deregulation law from attack. Their price cuts have hardly made a dent on the soaring prices of basic commodities and services.
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