MANILA, Philippines - Local oil industry players are studying their options on how to deal with declining oil prices and the eventual renewed spike in the global crude market.
Fernando Martinez, president of the Independent Philippines Petroleum Companies Association and Eastern Petroleum Corp., said oil players are continuously studying the trend of the industry and where prices would go.
He said oil players are working on various strategies including stockpiling in preparation for an eventual increase in prices.
However, he said this would be a matter of timing.
“That would be part of my strategy but at the right timing. Analysis and information that’s what we have to do… You do it at the right price. We may think that prices are now very low but what if it will still go down. It’s market risk appetite,” Martinez said.
While lower oil prices threaten oil companies’ revenues, he said it has also lowered their costs.
“The positive thing is the cost of doing business now is lower. This is the right time to maximize to either save or take advantage of the lower cost,” Martinez said.
Oil prices have gone down at least 25 times since the start of the year for gasoline, equivalent to P18.30 per liter, while diesel prices have gone down 31 times, equivalent to P18.85.
The latest cut was last weekend’s hefty price cut of P1.75 per liter for gasoline and P1.55 per liter for diesel.
Based on the latest oil price monitoring report of the Department of Energy (DOE), gasoline prices now range from P39.60 per liter to P45.70 per liter while diesel prices are now at a range P30.75 per liter to P34.10 per liter.
The global crude market is now flooded with supply on the back of the slump in economies that used to be big consumers of oil such as China.
The DOE said in its report that crude prices have dipped to as low as $65 per barrel or about 40 percent lower since it started to fall in June on concerns of supply glut in the world market.
But oil industry sources said the main culprit is really the growing utilization of US shale oil, an unconventional type of oil from oil shale rock fragments, which because of its lower price, is breaking the neck of the Organization of Petroleum Exporting Countries (OPEC).
US shale, which comes mostly from North America, costs $40 to $50 per barrel, or almost half compared to the $86 per barrel cost of oil from OPEC.
Read more on The Philippine Star.