|Danny Arao online
Another oil price hike is reportedly in the offing by April 15. Officials of oil companies claim that the increase could be as much as 50 centavos per liter due to increasing world crude prices.
They even argue that once the Clean Air Act is passed into law, pump prices could even go up to as much as P2.50 per liter as they comply with new environmental safeguards.
Looking at the hard facts, however, the Big Three (Petron, Shell and Caltex) are silent on the fact that they posted a whopping 1,060% increase in profits last year, as they had combined earnings of P6.1 billion. This is a big turnaround from reported losses amounting to P4.5 billion in 1997.
Analyzing the oil firms performance during the 1990s, their reported losses in 1997 are more than compensated by cumulative earnings reaching P37.2 billion from 1990 to 1998. Based on IBON computations, Petron, Shell and Caltex earned 18 centavos to 53 centavos for every liter consumed for the past nine years.
Notwithstanding the series of rollback of oil prices towards the end of 1998, IBON estimates show that these were not substantial based on the reduction of crude oil prices and the strengthening of the peso. According to IBON computations, oil companies have overpriced their products by P1.7 billion from January to December 1998. This translates to additional earnings of almost P200,000 per hour from overpricing alone!
IBON uses the old rule of thumb of the ERB as a benchmark for analyzing adjustments in pump prices. While full deregulation of the oil industry already subjects prices to market forces, IBON maintains that this methodology should still be used to check against profiteering which is what is happening right now.
Indeed, the full deregulation of the downstream oil industry has only fulfilled the hunger pangs of oil companies for more and more profits. While they have earned humongous profits even within a regulated regime, oil firms now have the opportunity to whimsically adjust prices all in the name of raking in much more.
DECLARED PROFITS OF BIG THREE
Source of basic data: SEC
BREAKDOWN OF EARNINGS DUE TO
IBON Computation based on ERB data
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