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Small oil firms warn of new price hike
Bernardette S. Sto. Domingo, BusinessWorld (23 Aug 2004)

MANILA, PHILIPPINES: A group of small oil firms yesterday said another increase in local pump prices could be expected within the week.

The Independent Philippine Petroleum Companies Association (IPPCA) -- composed of small oil firms like Seaoil, Unioil, Flying V, and Eastern Petrolem, with an estimated 15%-20% market share -- said escalating prices of oil in the world market was to blame.

"There could be another increase, possibly within this week. Dubai crude increases by almost a dollar everyday," said IPPCA chairman Fernando L. Martinez.

Energy Secretary Vincent S. Perez, Jr. said last week that he was expecting "weekly" movement in local prices.

"Mr. Perez's pronouncement on a weekly price adjustment is likely to happen," Mr. Martinez said.

Benchmark Dubai crude breached $40 per barrel last Wednesday, and closed at $40.49 a barrel last Friday.

Mr. Martinez said Dubai crude could possibly hit $50 per barrel, considering its upward trend.

"By Monday, we'll have more news or indication, but another round of increase this week is not far-fetched," he added.

Reports indicate that Russian oil company Yukos, which produces 1.9 million barrels daily, may close because it owes the Russian government $3.4 billion in back taxes.

Fighting in Iraq has also reduced production there to less than one million barrels daily from 1.7 million.

Uncertainty in Venezuela and Nigeria may cut into their oil production as well.

IPPCA members have under-recoveries of PhP1.60 for gasoline this month, while accumulated under-recovery for diesel since January 2002 is PhP2.60. This month, the under-recovery for diesel is PhP1.50. Oil firms again raised prices last week.

"That's a total of almost PhP4. Within the month, we need to recover PhP1.50. So far, we recovered 30 centavos from the latest increase," Mr. Martinez said.

Copyright © 2004 BusinessWorld Online, Inc. ALL RIGHTS RESERVED.

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