Economic Planning Secretary Ralph Recto insisted on Friday that oil companies are overpricing their products.
In a statement after arriving from a joint World Bank-International Monetary Fund meeting in Washington, Recto said "oil prices are higher than what the actual price should be."
As of April 16, he said oil companies were charging "about P8 more than the estimated gasoline price of P32."
The prices of oil firms then were: PhP40.85 per liter of premium plus unleaded gasoline; PhP39.71 per liter of premium unleaded gasoline; and, PhP39.07 per liter of unleaded gasoline.
"Assuming that oil companies had purchased their stock of Dubai crude at US$50/bbl or PhP2,408/bbl based on an exchange rate of PhP48.16 to the dollar at that time, then pump prices of domestic gasoline should be about PhP32.16,” Recto said.
“However, if they had purchased Dubai Crude Oil in February or March as some of them keep an inventory of 30 to 60 days, then prices should even be lower”, he added.
Dubai crude was at US$42.21/bbl or PhP2,024/bbl (PhP47.96 to US$1) as of Feb. 20, and US$44.51/bbl or PhP2,149/bbl (PhP48.29 to US$1) as of March 20.
Recto noted that when Dubai crude was at PhP2,176/bbl in February 2005 (US$39.70/bbl at PhP54.81 to US$1), domestic gasoline was at PhP27.37 per liter while at PhP2,495/bbl (US$45.84/bbl at PhP54.44 to US$1) in March 2005, domestic gasoline was at PhP29.22.
“Thus, interpolating the cost of domestic gasoline at PhP2,408/bbl given the above Dubai crude and pump prices, it would be at PhP32.16,” Recto explained.
He said even the most expensive gasoline in the US is being sold was being sold at P29.57 per liter as of April 20.
"Premium reformulated retail gasoline cost US$2.343 per gallon or PhP29.57 per liter at PhP47.77 to US$1 as of April 20 (one gallon is equal to 3.785 liters)," he said, citing US prices.
Recto called on Congress to pass a law that would allow government to better tax oil products and raise much-needed funds for basic needs and renewable energy.
“Government may not have the tools to lower oil prices under the deregulation law and therefore must collect the appropriate taxes from the oil companies so we may make the necessary investments for health, education, social protection to help the poor as well as in renewable energy,” he said.
He said that “when the global economy rebounds, oil prices will again hit the roof. Thus it is important for Congress to enact legislation that would empower the government to protect consumers.”