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11 November 1999
Press Release No. 99-13

An oil price rollback of P2.91 per liter
is right and just --- IBON

As the people brace for more oil price hikes ahead, it must be reiterated at this point that the series of oil price hikes since April 1999 have no basis. Instead, there should be a rollback of P2.91 per liter.

Oil firms have yet to "scientifically deny" accusations of monopolistic pricing and other oligopolistic acts in a deregulated regime. All that they have done is to dismiss accusations as hearsay without the benefit of providing relevant data to the public.

IBON Foundation has maintained that oil companies have overpriced their products in 1998, and even concerned legislators like Rep. Enrique Garcia have accused oil firms of other forms of oligopolistic practices.

IBON�s research on the oil industry revealed that during the time when crude prices went up slightly in 1998, oil firms were quick to impose atrociously high increases in pump prices. And when crude prices went down substantially, the oil firms only imposed a minuscule rollback.

Aside from the issue of overpricing, oil companies have also not openly disclosed their crude stock inventory, since doing so will only expose the fact that the refined petroleum products they are selling right now were bought at prices, say, three months ago when crude oil was lower.

Neither have oil firms revealed the actual landed cost and sources of their crude oil, since the people will find out that their actual purchase is also lower than spot crude prices, by virtue of their normal operation to buy in bulk.

Amidst all this, IBON maintains that instead of an oil price hike, the people should be given instead a rollback of P2.91 per liter.

This is based on the cumulative oil price hikes from April to October 1999 which total P1.95 per liter based on industry average, and the overpricing of oil firms in 1998 amounting to P0.96 per liter. IBON arrived at the prescribed rollback by adding these two figures.

Through this rollback, the people may be able to get what was stolen from them as oil companies used increased crude prices as an excuse to impose oil price hikes despite the additional earnings they got from overpricing in the past.

A rollback, IBON adds, can even go as much as P4.49 per liter if government will muster enough political will to scrap the specific taxes on petroleum products which amount to P1.58 per liter on the average.

IBON Foundation is an independent research think-tank. For more information, please call Danny Arao at 713-2729 or 713-2737. E-mail address is [email protected]

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