department of energy presentation re: oil pricing, august 2009
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Deregulation and Oil Pricing
in the Philippines
Deregulation and Oil Pricing
in the Philippines
Department of Energy
Presentation to the
House Committee on Energy
Department of Energy
Presentation to the
House Committee on Energy
July 29, 2009
July 29, 2009
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CRUDE
AVTURBO8.6 8.7
PREMIUM13.4 17.6
KEROSENE1.6 1.2
DIESEL36.8 40.2
FUEL OIL24.6 16.0
REGULAR6.5 4.1
Other Products
(Asphalts/Solvents/Avgas/NaphthReformate/Condensate)
3.0 0.50
LPG5.5 10.1
177.2 MBCD 276.5 MBCD
FY 2008 Production/ Demand Mix
20072007
SectoralSectoralDemandDemand
SectorSector %%
TransportTransport 6363
ResidentiaResidentiall
88
CommerciCommercialal
55
AgriculturAgriculturalal
33
IndustrialIndustrial 1414
PowerPower 77
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2008 Energy/Power Mix
Self-sufficiency level =
57.9%
Energy Mix
Total Generation = 60,820GWh
Coal
25%
NaturalGas
32%
Ge o
18%
Hydro
16%
Oil
8% Solar & Win
0%
Self Sufficiency Level = 67%
Power Mix
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An Act Deregulating the Downstream OilAn Act Deregulating the Downstream Oil
Industry, and for other PurposesIndustry, and for other Purposes
`to ensure a truly competitive market`to ensure a truly competitive market
under a regime of fair prices,under a regime of fair prices,
adequate and continuous supplyadequate and continuous supply
of environmentally-clean and high qualityof environmentally-clean and high quality
petroleum products`petroleum products`
Republic Act No. 8479
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An Act Deregulating the Downstream OilAn Act Deregulating the Downstream Oil
Industry, and for other PurposesIndustry, and for other Purposes
`to ensure a truly competitive market`to ensure a truly competitive market
under a regime of fair prices,under a regime of fair prices,
adequate and continuous supplyadequate and continuous supply
of environmentally-clean and high qualityof environmentally-clean and high quality
petroleum products`petroleum products`
Republic Act No. 8479
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RA 7638 DOE Law RA 8479 Oil Deregulation Act
RA 8749 Clean Air Act
RA 9367 Biofuels Act
RA 8184 Excise Tax
RA 9337 RVAT
EO 691 Automatic TariffAdjustment
EO 449 Lower Tariff forBioethanol for Fuel
DOE Circ 2006-08-011 Importations of
REGULATORY FRAMEWORKREGULATORY FRAMEWORK
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DOE - OIMB
Monitoring
Fuel quality/quantity (RA 8479 / RA 9367)
refining/marketing process, inventory, price (RA 8479)
Additives Registration (RA 8479 / RA 8749)
Fuel Quality Standard Setting (RA 8749 / RA 9367)
Petroleum Facilities Standard Setting (MOA with BPS)
Regulate as necessary (RA7638)
DOE - EUMB (RA 9367)
Accreditation of Biofuels Manufacturers
Monitoring of Biofuels Manufacture/Marketing
DOE-ERTLSconducts testing of samples,
DOE-Legalprocesses violations
DOE ROLESDOE ROLES
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DOWNSTREAM OIL SECTOR
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2008 MARKET SHARE
Total oil LPG
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LPG Market Share - FY 2008
May 27,
Total Country
11,509 MB
Petron
37.7%
Shell
19.9
Total
9.1%
Liquigaz
24.2%
Pryce Gas
3.4%
Petronas5.8%
Liquiga
28%
Total
25.6
Petron24%
Shell
22.4
S. Luzon
1,361 MB
Total
13%Petronas
1.1%
Liquigaz
20.6%
Shell
25.9%
Petron
39.4%
NCR
3,850MB
Visayas
1,296 MB
Total
0.1%
Shell
24.4%
Petron
34.9%
Pryce
15%
Petronas
25.6%
N. Luzon
4,036 MB
Total
4.86%
Shell
12.67%
Liquigaz
39.90%
Petron
41.80%
Pryce0.76%
Total
0.2%
Shell
16.5%
Petron
36.8%
16.8
Petrona
29.7%
Mindanao
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0
50
100
150
200
250
300
350
400
450
500
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Refining Cap. Demand Production Imports Exports
YEAR 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
% Ref. Utilization 72.0 85.6 81.0 82.8 84.6 89.5 91.5 81.0 76.7 72.5 70.7 61.5 70.0 68.8 74.2 72.9 73.7 64.6
Petroleum Supply vs. DemandPetroleum Supply vs. Demand
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Regional Distribution Of OilRegional Distribution Of OilDownstream FacilitiesDownstream Facilities
REGION I456MB
6 Depots
REGION III4,676MB
16 Depots2 I/E Terminal
(Subic& Clark)
N C R2,073MB
22 Depots
REGION IV-A2,557 MB; 8Depots
2I/E Terminal(SGEI & CALTEX)
REGION IV-B145 MB; 11 Depots
REGION VI
621 MB15 Depots
REGION IX211 MB
5 Depots
A R M M
2 MB1 Depot
REGION XI445MB
7 Depots
REGION II101 MB
5 Depots
C A R0.49MB1 Depot (non operational)
REGION V138MB5 Depots
REGION VIII255 MB
8 Depots
REGION VII707 MB15 Depots
REGION X
644 MB12 Depots
REGION XII260 MB
6 Depots
L
u
zon
V i s a y a s
M i n d a n a o
REGION XIII (CARAGA)
86 MB3 Depots
6-30-2008
No. CAPACITIES
DEPOTS (MB)
Majors 75 5,652
Others 75 2,842
TOTAL DEPOTS 150 8,493
IMPORT/EXPORT TERMINALS
Subic - Olongapo 1 2,445
Clark - Pampanga 1 600
SGEI - Tabangao, Batangas 1 290
Caltex - San Pascual, Batangas 1 1,548TOTAL TERMINALS 4 4,883
REFINERY (Crudes & Products)
Petron- Limay, Bataan 9,382
Shell - Tabangao, Batangas 5,380
TOTAL REFINERY 14,762
TOTAL 28,139
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Liberalized entry of new players (145 brands)Liberalized entry of new players (145 brands) Refiners - 2Refiners - 2
Produce 30% of local LPG demand; 60% of total productsProduce 30% of local LPG demand; 60% of total products
58% market share (LPG);58% market share (LPG);
Importers (including refiners) - 10Importers (including refiners) - 10
6 for LPG, 2 operating only in VisMin6 for LPG, 2 operating only in VisMin
Imports 70% of local LPG demand ; 40% of total productsImports 70% of local LPG demand ; 40% of total products
LPG Refillers - 8LPG Refillers - 8
6 importers have 49 refilling plants6 importers have 49 refilling plants
8282 independent refillers have 136 plantsindependent refillers have 136 plants 5757 independent marketers avail of facilities of refillersindependent marketers avail of facilities of refillers
LPG Dealers/retail outlets 1,300/10,000LPG Dealers/retail outlets 1,300/10,000
Auto-LPG stations 178 public; 66 garage-basedAuto-LPG stations 178 public; 66 garage-based
Gasoline stations 4,000Gasoline stations 4,000
800800 new playersnew players
REGULATORY FRAMEWORKDeregulated Oil Industry
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Oil Pricing
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0
10
20
30
40
50
60
70
80
90
100
110
120
130
140
150
M-84
J-85
N-85
S-86
J-87
M-88
M-89
J-90
N-90
S-91
J-92
M-93
M-94
J-95
N-95
S-96
J-97
M-98
M-99
J-00
N-00
S-01
J-02
M-03
M-04
J-05
N-05
S-06
J-07
M-08
M-09 0
5
10
15
20
25
30
35
40
45
50
55
60
Dubai US$/bbl Dubai P/li Forex P/1$
DUBAI CRUDE PRICES/FOREX
March 1984 MTD July 2009$/bbl P/$
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DUBAI vs. BRENT vs. WTI
January 2005 MTD July 2009
$/bbl
140
150
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25
35
45
55
65
75
85
95
105
115
125
135
145
155
165
175
185
195
3-Dec
24-Dec
14-Jan
4-Feb
25-Feb
17-Mar
7-Apr
28-Apr
19-May
9-Jun
30-Jun
21-Jul
11-Aug
1-Sep
22-Sep
13-Oct
3-Nov
24-Nov
15-Dec
5-Jan
26-Jan
16-Feb
9-Mar
30-Mar
20-Apr
11-May
1-Jun
22-Jun
13-Jul
$/bbl
INTERNATIONAL PRICES
December 2007 MTD July 2009
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SOURCES OF SUPPLY
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DAILY INTERNATIONAL PRICE vs
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DAILY INTERNATIONAL PRICE vs.COMMON PUMP PRICE
In P/li, Jan MTD Jul 2009
4 0
4 5
International prices shown as FOBInternational prices shown as
Total-Paid Landed Cost (TPLC)
40
45
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P/li
INTERNATIONAL vs. DOMESTIC PRICESJanuary 2009 MTD July 2009
40
45
International prices shown as
Total-Paid Landed Cost (TPLC)
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DUBAI vs. MOPS (Tax-paid Landed
Cost)vs. MANILA Pump PriceP/li
4 0
4 5
4 0
4 5
Unleaded
Diesel
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PREVAILING RETAIL PRICES in
METRO MANILAAs of July 28, 2009*
P R O D U C
U N L E A D E D
P R E M IU M U N L E A
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METRO MANILA PRICING
P/li
5 0
Gasoline
5 0
Diesel
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P/kg
DUBAI vs. CP LPG vs. MM LPG WPPJanuary 2009 MTD July 2009
45
50
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INTERNATIONAL vs. DOMESTIC PRICES
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Top
Producers mil bbl/d
Net
Exporters mil bbl/dSaudi Arabia 10.25 Saudi Arabia 8.04
Russia 9.87 Russia 7.05
United States 8.46 UAE 2.51
Iran 4.03 Norway 2.34
China 3.91 Iran 2.33
Mexico 3.50 Kuwait 2.29
Canada 3.42 Nigeria 2.08
UAE 2.95 Venezuela 1.96
Venezuela 2.67 Algeria 1.91
Kuwait 2.62 Angola 1.71
Norway 2.57 Libya 1.58
Nigeria 2.35 Iraq 1.50
Brazil 2.28 Mexico 1.38
Algeria 2.17 Kazakhstan 1.21
Iraq 2.10 Canada 1.06OPEC =12 countries incl.Angola and Ecuador; Indonesia no longer member
Source: EIA 2007 data
OPEC Cartel vs WorldSupply/Demand
2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9
D E M A N D
U S * 2 0 . 8 0 2 0 . 6 9 2 0 . 6 8 1 9 . 5 1 1 8 . 9
C h i n a 6 . 7 0 7 . 1 4 7 . 5 4 7 . 8 6 7 . 8
In d ia 2 . 5 3 2 . 6 0 2 . 9 5 3 . 0 7 3 . 1
P h i l s . 0 . 3 0 0 . 2 8 0 . 2 9 0 . 2 7 0 . 2
O t h e r s 5 3 . 5 7 5 4 . 3 9 5 4 . 5 8 5 5 . 0 6 5 3 . 2
T O T A L W O R L D D E M A N D8 3 . 9 0 8 5 . 1 0 8 6 . 0 4 8 5 . 7 7 8 3 . 4
S U P P L Y
O P E C * * 3 0 . 3 1 2 9 . 6 4 3 1 . 0 4 3 2 . 1 5 2 8 . 2
N o n - O P E C 4 9 . 2 0 4 9 . 7 0 5 0 . 1 5 4 9 . 5 4 5 0 . 0
O P E C N G L s
c o n v e n t i o n a l s 4 . 5 0 4 . 6 0 4 . 7 7 4 . 9 6 5 . 5
T O T A L S U P P L Y 8 4 . 0 1 8 3 . 9 4 8 5 . 9 6 8 6 . 6 5 8 3 . 4
N o t e : 1 ) B a l a n c e o f T o t a l S u p p ly v s T o t a l D e m a n d : s t o c k c h a n g
2 ) T o t a l s u p p ly a n d d e m a n d t a k e n f r o m IE A f o r e c a s t3 ) O P E C m e m b e r s n o w e x c l u d e s In d o n e s i a .
4 ) IE A q u o t e d 2 8 . 2 m il b / d a s " c a l l" f o r O P E C f o r 2 0 0 9 , .
S o u r c e : IE A 's A p r i l ' 0 9 O i l M a r k e t R e p o r t
* E I A
* *P la t t s s u r v e y
m i ll io n b / d
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Independent Review CommitteeIndependent Review Committee
Third Party Reviews
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1. Mr. Carlos R. Alindada Private Sector
- retired Chairman of SGC & retired Commissioner of ERC.
- served as Chair of the IRC
2. Mr. Cedric R. Bagtas Labor Sector
- Deputy-General Secretary of the Trade Union Congress of the Phils. (TUCP)
3. Ms. Merceditas A. Garcia Oil Industry (Dealers Association)- President of the Federation of Petroleum Dealers of the Phils.
4. Mr. Jose P. Leviste, Jr. - Business Sector
- Chairman of the Philippine Business Leaders Forum, Inc.
- original Executive Director of the Petroleum Board
5. Mr. Alberto H. Suansing Consumer/Transport Org.
- Secretary General of the Confederation of Land Transport Organizations of the Phils.- undertaking several advisory functions for the Secretary of DOTC
6. Dr. Peter Lee U Academe
- Dean, School of Economics, University of Asia and the Pacific
- had prepared several papers & studies on Oil Deregulation
Composition of IRC
INDEPENDENT REVIEW COMMITTEE
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Independent Oil Deregulation Law
Review Committee
Composition:- Mr. Carlos R. Alindada (designated Chairman )
- Ms. Merceditas A. Garcia - Dean Peter Lee U
- Mr. Jose P. Leviste, Jr. - Mr. Alberto H. Suansing
- Mr. Cedric R. Bagtas
Mandate:To review/assess the implementation of RA 8479
Time Frame: 90 Days (until June 2005)
Issues to Focus:
- Policy Under RA 8479 - Pricing Behavior - Product Margins - Price Fixing/Cartelization
- Clean Air Act - Enforcement of Standards-Oil Security
Activities: 10 Meetings conducted starting March 17, 2005
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ON PRICES
The main cause of oil price increases was the effect of major peso devaluationsand increases in the international price of oil especially since we import practicallyall our oil product requirements.
Subsidy is not a viable solution because it will cost government excessive amountsof money.
There is no evidence of price cartels. When products are interchangeable, whenmarket share is the name of the game, and competition is in full swing, we shouldnot be surprised, but rather expect, that oil companies prices will seem to rise and
fall at the same time. However, this does not mean that cartels exist.
ON COMPETITION
Deregulation has increased competition in the industry. There are both positive and negative effects on competition. The
effect on lowering prices outweighs other effects.
IN SUMMARY
Do not change the Policy of the State.
IRC - FINDINGS/CONCLUSION
SGV UA&P I d d t St d
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Findings/Conclusion
Per the opinion of the author, the oil prices do not seem to have been unreasonably high for theperiod covered by the data in the study.
Price data from Jan. 2005 to Jan 2008 suggests that local pump prices have not gone up as fast asthe price of crude abroad or the MOPS prices for diesel and unleaded gasoline during the period.
Philippine pump prices simply tracked MOPS prices; a comparison of the share of the oil companytake in 2007 with that in 1998 shows the same trend of a declining share of the pump price thatgoes to the oil company.
SGV UA&P Independent Study
on Oil Prices
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-18
-16
-14
-12
-10
-8
-6
-4
-2
0
2
4
6
8
Jan-87 Jun
No
v
Ap
r
Se
p
Fe
b
Jul
De
c
May
Oct Ma
r
Au
g
J9
2
Jun
No
v
Ap
r
Se
p
Fe
b
Jul
De
c
May Oc
t
Ma
r
Au
g
J97
Jun
No
v
Ap
r
Sep
Billion
Pes
os
P5Bn
Petroleum
Price
Standby
Fund
(RA 6952)
P3Bn equity
infusion to NPC
(RA 7639)
P5BnRemitted by
PNOC
P4Bn
Remitted by
PNOC
APM
implemented
mid-Aug 1996
Oil Price Stabilization Fund
HISTORICAL NET INCOME/(LOSS)
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HISTORICAL NET INCOME/(LOSS)
(In Percentage)
2004 2005 2006 2007 2008
P E TR O N 2.78 3 .16 2.84 3 .04 (1.46
S HE LL 2.25 3 .87 2.63 3 .90 1.20
CALTEX (2.6 1) (0.52 ) 3.65 3 .90 (1.51
T OT A L (2.37) 0.64 (1.01) 1.28 (2.02
E A S T E RN (0.56) 0.25 0.55 0 .49 0.19
S E AO IL 0.31 0 .23 0.27 0 .51 4.08LIQ UIGAZ 1.06 1 .02 0.62 1 .01 0.13
P R Y C E (6 .4 9) (1 .1 5) (0 .5 8) 23.46 (12.58
P TT (1 4.5 2) (1 .5 9) 0.71 0 .01 1.39
F o rm u l a : N e t I n c o m e /S a l e s * 1 0 0
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High Oil Prices A GlobalPhenomenon
A.On going:
1. Incremental local oil prices increases P0.50-2.00/li per
week2. Diesel discounts in PUJ jeepney lanes
3. Automatic tariff cut (EO 691) - P1.50/l cut on price effectiveJune 2008
4. Enhanced enforcement
PTF-SEFEELS: court cases/closure/penalties PAKTAF: anti kotong/kolorom drive now giving public transport drivers
additional P4,000/mo. take home
B. Long term:
5. Energy conservation & efficiency
MITIGATING MEASURES
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` Bio- fuels
Coco-diesel Alcogas / diesel
Natural Gas LPG
Water-based Wind Solar
Hydrogen Electric
Fuel CellsFuel Blends Hybrids Dual
Alternative Fuels and BlendsAlternative Fuels and Blends
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BIOFUELSBIOFUELS
Mandate Biofuels ActMandate Biofuels Act
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Mandate Biofuels ActMandate Biofuels Act
Strategy for Feedstocks
Status of BiodieselStatus of Biodiesel
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Status of BiodieselImplementationStatus of BiodieselImplementation
Country Mixing Rate
(Mandatory)
Main
Feedstocks
Strategy/ Goal Standard
Philippines
B1 (2004)for diesel-fedvehicles ofgovernment , incl
owned andcontrolled corp.
Coconut MemorandumCircular #55(MC55)
PNS/DOE QS002:2003(B100)
(Biodiesel =
CME :Cocomethylester)
B1 (2007)for all diesels
Coconut
(Researchon-going for
Jatropha andotherfeedstocks
Biofuels Law2006
National
Biofuels Board
MC55
PNS/DOE QS002:2007(B100)
PNS/DOE QS004:2007 (B1)
B2 (2009)
for all diesels
Coconut
(Research
Biofuels Law2006
PNS/DOE QS002:2007
Status of E-GasolineStatus of E-Gasoline
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Status of E GasolineImplementationStatus of E GasolineImplementation
Mixing Rate MainFeedstocks
Strategy/Goal
Standard
E10 voluntaryintroduction bycompanies inselected stations(2005)
Bioethanol(from sugarcane,imported
EO 449 1%tariff (insteadof 10%) withDOEcertification foruse in biofuel
program
PNS/DOE QS 00:200(bioethanol = anhydrousor E100)
PNS/DOE QS 00:200 (fuelbioethanol = denaturedbioethanol)
PNS/DOE QS 00:200 (E10)
E10 voluntaryintroduction byall companies inselected stations(2009) to complywith 5%mandatorysubstitution ofgasoline
Sugarcane alcohol anhydrous
(Research on-going forcassava, sweetsorghum andotherfeedstocks)
Biofuels Law2006
National
Biofuels Board
PNS/DOE QS 00:200 (E10)
E10 mandatory sugarcane Biofuels Law PNS/DOE QS 00:200 (E10)
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Concerns/Next StepsConcerns/Next Steps
CONCERNS NEXT STEPS
Quality assurance capabilities ofQuality assurance capabilities ofthe biofuel producersthe biofuel producers
Inter-laboratory correlation Accreditation of 3rd party laboratory Acquisition of common equipment Discussion on markers (product ID)
Qualified storage and transportQualified storage and transportfacilitiesfacilities
Preparation of standards andregulations
Compatibility of the higher biofuelCompatibility of the higher biofuelblends on the existing vehicleblends on the existing vehiclefleet as well as those underfleet as well as those underwarranty etc.warranty etc.
Conduct studies Prepare guidelines
Higher price of biofuel comparedHigher price of biofuel comparedwith pure gasoline/dieselwith pure gasoline/diesel
RD&E of feedstocks, capabilities andmarkets
Closer coordination withCloser coordination with
stakeholdersstakeholders
Intensified information,Intensified information,
education and communicationeducation and communication
StandardizationStandardization
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Fuel Quality Conventional
Alternative fuels &blends
Facilities Gasoline stations LPG vehicles, parts /
conversion kits
Terminals Control equipment
(correlation)
Codes of Practice LPG Vehicle
Conversion Retail Operation
Bulk Storage,Handling &Distribution
StandardizationStandardizationThrust Towards Harmonization
Benefits of harmonized biofuels quality standard
Align readily local fuel standards to the WWFC vis--vis local emission regulations Reconcile general biodiesel standard and its blends with emerging vehicle
technologies Facilitate trade across boarders thus ensuring supply availability/ better economy Better access to improvements in technology, leading to improvements in air quality
Benefits of ERIA BDF Standardization for East Asia Project Consideration of other biodiesel feedstocks, e.g. coconut, by WWFC, ASTM and EN
Review of parameters, limits and methods in the international and local standards
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IN SUMMARYIN SUMMARY
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Non-pricing factorsNon-pricing factors
REGULATED DEREGULATED
Entry Reqts. Prior License Prior Notice
Import/ExportReqts.
Prior Permit Prior Notice
Players 6 to 3 Over 800
Investment Minimal until deregulationpolicy declared
P34B to date
Quality
Product
Facilities
Service
Meets minimum standard
Meets minimum standard
Meets minimum standard
More product grades withperformance additives
New image; Conveniencestores; Restrooms;
Much improved
REGULATORY FRAMEWORK
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Price DecontrolPrice Decontrol
DOE monitors international and local pricesDOE monitors international and local prices
Daily MOPS indications of Dubai, gasoline, diesel, keroseneDaily MOPS indications of Dubai, gasoline, diesel, kerosene
Monthly CP (Contract Price of Saudi Aramco) of LPGMonthly CP (Contract Price of Saudi Aramco) of LPG
Retail prices, esp. MMRetail prices, esp. MM
Oil companies set local pricesOil companies set local prices
For gasoline, diesel, etc:For gasoline, diesel, etc:
This year - Shell led weekly reflection of MOPS in local pricesThis year - Shell led weekly reflection of MOPS in local prices
Prior years oil cos. implemented moderated price adjustmentsPrior years oil cos. implemented moderated price adjustments
For LPG, the movements in the CP is quickly reflected in the domestic market,For LPG, the movements in the CP is quickly reflected in the domestic market,
i.e., within the month of effectivityi.e., within the month of effectivity
Prices in cylinders are in P/kg; auto-LPG stations are in P/liPrices in cylinders are in P/kg; auto-LPG stations are in P/li
Independent refillers exercise freedom of choiceIndependent refillers exercise freedom of choice
Shop around for lowest priceShop around for lowest price
Few independent refillers enter into term supply contractsFew independent refillers enter into term supply contracts
Some inde endent refillers enter into alliance with bulk su liersSome inde endent refillers enter into alliance with bulk su liers
REGULATORY FRAMEWORKDeregulated Oil Industry
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CIF Cost of Crude/Petroleum Products
+ Import duty
+ Specific tax
+ Port chargers and other imposts
+ VAT
+ Refining Cost (for crude)
+ Storage/Handling/Marketing Costs+ Oil Company's Profit
Wholesale Posted Price
Direct Oil Company Take
+ Hauling Charge
+ Dealer's Mark-Up
+ VAT
+ Transhipment Cost
+ ( Profit Margin + VAT for local sale)
Pump Price
Oil Pricing - Components
Oil P i i
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Basic considerations
1. Basis
2. Reference
3. Methodology
4. Reckoning
Oil Pricing
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Pricing factorsPricing factors
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POLICY : ENSURE STABLE SUPPLY OF ENERGY
GOALS:
To ensure oil supply security sufficient, stable, accessible
& quality
To conduct technical, economic and social assessment and
studies to ensure continuous and stable supply of oil.
POLICY : RESPONDING TO HIGH OIL PRICES
GOALS:
To ensure oil prices reasonable
To mitigate impact of high oil prices on consumers
To minimize economic leakage on the oil and the public
transport sectors
To promote efficiency and safety in supply and distribution
chain
POLICIESPOLICIES
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Cooperation with other agencies for more intensive monitoring (supply, price, quality, quantity) and enforcement
DTI: Supply and price monitoring, esp. outside MM, Cebu and Davao
PTF-SEFEELS: Continuous inspections for consumer safety and protection (underfilling, illegal refilling, illegal
trading)
NB: Surveillance for hoarding
More active DOE-DOJ TF
assisting complainants of high LPG prices (Feb 3-5)
to pursue cases filed by DOE and the LPG industry
advised LPG companies to petition TRO and/or writ of preliminary mandatory or prohibitory injunction against i llegal traders
(over 150 cases pending)
DOE to issue Circulars to improve safe and fair trade practices
DOE to push for passage of LPG Bill
DOE / Government ActionsDOE / Government Actions
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Oil Deregulation
a work in progress
Oil Deregulation
a work in progress
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Thank you!Thank you!
Oil P i St bili ti F d
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-18
-16
-14
-12
-10
-8
-6
-4
-2
0
2
4
6
8
Jan-87 Ju
n
Nov
Apr
Sep
Feb
Ju
l
Dec
Ma
y
Oct
M
ar
Aug
J92
Ju
n
Nov
Apr
Sep
Feb
Ju
l
Dec
Ma
y
O
ct
M
ar
Aug
J9
7
Ju
n
Nov
Apr
Se
p
Billion
Pes
os
P5BnPetroleum
Price
Standby
Fund
(RA 6952)
P3Bn equity
infusion to NPC
(RA 7639)
P5Bn
Remitted by
PNOC
P4Bn
Remitted by
PNOC
APM
implemented
mid-Aug 1996
Oil Price Stabilization Fund
HOW DID NEDA ARRIVE AT
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HOW DID NEDA ARRIVE AT
THEIR FIGURES
Straight-line Interpolation using DCO
NEDAs gas estimates involve the following:
1)Converting dollar price of DCO to peso
2)Identifying appropriate dates/periods for comparison
3)A straight-line interpolation using DCO prices and averagepump prices of two reference periods
4)Adjusting interpolated pump price to current pump pricing
DOEs RESPONSE TO
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DOE s RESPONSE TO
NEDAs COMPUTATION
It is not reasonable to compare the international prices in previousperiods with that of the current and then relate it to domestic prices
since the economic conditions during the said periods are not
comparable.
In 2005, the oil companies were still implementing the small andstaggered adjustments, as requested from them by the DOE in
2004, hence, the domestic price during that time might not be the
true reflection of international prices.
It is more appropriate to use the Mean of Platts Singapore (MOPS)as basis of the prices, since around 50% of petroleum products
sold domestically is imported as finished products and all industry
players are importing finished products, including refiners Petron
and Shell.
DOEs RESPONSE TO
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DOE s RESPONSE TO
NEDAs COMPUTATION
The use of the COMMON PRICE, the price most commonly found
in the market today, which is below the suggested retail prices
submitted by the oil companies to DOE.
The common price is also below the price computed by the DOE,which was based on the last ERB price build-up plus the
adjustments implemented by the oil companies since deregulation.
The common price was observed starting February 2009 when theprice war in Metro Manila started. The common price is lower by
almost P3.50/liter for gasoline almost P4.50/liter for diesel.
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