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Press Release No. 99-10
26 May 1999

Big Three to earn additional
P1.2 million PER HOUR from oil price hike


The planned Metro-wide transport strike tomorrow (May 27) should serve as a wake-up call for oil companies that Filipinos will not take the issue sitting down.

Pilipinas Shell increased pump prices by three centavos per liter last May 21, and then by 57 centavos per liter two days after (May 23). Market leader Petron, for its part, implemented a 51-centavo per liter oil price hike on May 25. Caltex has yet to follow suit as its latest oil price hike happened on May 11, when it increased pump prices by 17 centavos per liter.

IBON computations show that the Big Three gets additional combined earnings of P29.6 million daily from the staggered oil price hike since May 11. Computed on an hourly basis, this means that Petron, Shell and Caltex post combined earnings of about P1.2 million PER HOUR!

This computation is based on the projected petroleum consumption of 65 million liters everyday for 1999 and the Big Three’s respective market shares.

Petron enjoys a 40% market share, while Shell and Caltex have 34% and 23% market share, respectively. Other industry players only have a 3% market share.

In the recent past, IBON maintains that there is no basis for any oil price hike despite the current increase in world crude prices.

For one, no less than the Department of Energy (DOE) admits that the crude stock of oil firms were bought at prices lower than the current world crude levels. This is a major reason why government has recently asked oil firms to open their books.

Even concerned legislators argued that the oil firms’ decision to increase pump prices is the "height of callousness," given that they posted net profits amounting to P6.4 billion in 1998, a big turnaround from the previous year’s reported losses of P4.5 billion.

An oil price hike would also be tantamount to tolerating the overpricing of oil firms in 1998. IBON computations show that for the whole year of 1998, oil companies overpriced their products by P1.7 billion, or roughly P200,000 per hour.


Combined Additional Earnings of Petron, Shell and Caltex
from Oil Price Hikes from May 11 to May 25, 1999

  Estimated Sales per day a/ Oil Price Hike Additional Daily Earnings
Petron 26.0 million liters P0.51 / liter P13.3 million
Shell 22.1 million liters P0.60 / liter P13.3 million
Caltex 14.9 million liters P0.20 / liter P3.0 million

IBON Computation based on DOE data
a/ computation based on market share and projected consumption of 65 million liters per day for 1999

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