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Oil Price Hike: The Price of Full Deregulation
Oil companies have increased pump prices by as much as 50 centavos today (April 21) as they remain silent on IBON findings of intense profiteering in 1998.
Analyzing the effects of deregulation of the downstream oil industry since 1996, it is clear that the promise of lower prices and better services has been honored in the breach.
What happened in 1998 is a glaring example of oil companies zest for superprofits. Notwithstanding the decrease in crude prices due to oversupply in the world market, the consecutive reductions in pump prices towards the end of 1998 were not substantial. In fact, IBON computations even show that oil firms overpriced their products by as much as P1.7 billion for the whole of 1998. This is already close to P200,000 per hour!
Data from the Securities and Exchange Commission (SEC) also show that the Big Three (Petron, Shell and Caltex) also had a whopping 1,090% increase in profits last year. Analyzing the oil firms performance during the 1990s, their reported losses in 1997 are more than compensated by cumulative earnings reaching P37.5 billion from 1990 to 1998.
The current situation of increased crude oil prices from January to March 1999, therefore, must be seen in this context. After all, in analyzing the oil firms unpopular decision, one needs not just a sense of economics, but also a sense of history.
DECLARED PROFITS/(LOSSES) OF BIG THREE OIL FIRMS
1997-1998 (in billion pesos)
Source of basic data:
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