Oil price manipulation

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First of a two-part series on the Philippine oil industry.

Superprofits accumluation by oil companies while the Filipino people undergo extreme hardships amid the grave economic crisis and pandemic invites outrage. Last March 17, the prices of petroleum products once again increased. This was the eighth hike since January 6, two and a half times more frequent than price decreases.

In sum, in more or less 50 days, the prices per liter of diesel, regular gasoline, and kerosene already increased by ₱5.70, ₱4.61, ₱4.27, and ₱5.01, respectively.

Oil companies are exploiting the increase in demand for diesel and other oil products ever since the economy and public transportation were partially reopened. They want to quickly earn profits to recover their income losses last year. They are rushing as they are worried that the regime might reimpose restrictions amid the pandemic.

They are making it appear that the fluctuations in oil prices are dependent on the prices of crude oil in the global market. However, there is actually no formula on how they impose prices. In truth, local prices are set by cartel arrangements between oil companies.

The fluctuations in the prices of petroleum products are a result of price manipulation by oil companies. They carry this out in order to exact maximum profit in selling their commodity. In the past, prices have increased more often than they dropped. Since 2017, price increases were 1.2 times higher compared to price decreases. (See Table 1).

Aside from more frequent increases, oil companies also peg the prices of petroleum products for more days after increases compared to after rollbacks. From March 6 to March 11, prices stayed up for 49 days while remained down only for 15 days. This was also true in the past years. (See Table 2). The same happened in 2020 even if sales were very low.

Analyzing data, it can be observed that the claim of local companies that fluctuations are caused by changes in the price of crude oil, is not exactly true. It can be seen that the number of days that domestic prices were up is higher compared to the number of days that the global price of crude oil increased. (See Table 3.)

Price manipulation by oil companies must be denounced. This adds to the plight of the Filipino people, especially the workers, farmers and semiproletariat. The increases in the price of diesel and gasoline further pushes up the price prices of food, transportation and other basic goods and services.

It is only just for the Filipino people to demand a rollback or decrease in the prices of oil products to somehow ease their burden. It is just for them to demand price controls on petroleum products and implement a moratorium on oil price hikes. They must also demand the junking of the 10% additional oil tax levied by Duterte during the pandemic, on top of other increases imposed through the TRAIN law which are all passed on by oil companies to consumers.

Oil price manipulation