An executive of Pilipinas Shell Petroleum Corp. said Wednesday he was “surprised” that an investigation into the alleged collusion of oil firm giants was again launched by the government to look into persistent accusations that they were manipulating fuel prices.
Edgar Chua, chairman of the Shell companies in the Philippines, noted that similar investigations had been conducted but results consistently belied the collusion allegation.
Chua was referring to the 2005 and 2008 investigations by the Department of Energy (DOE) into the alleged collusion among the country's three major fuel retailers – Shell, Chevron Philippines (formerly Caltex) and Petron Corp.
“…and both teams came out with the same conclusion that there was no collusion and the returns of the oil companies are in fact lower… those two studies came out with the same conclusion so I’m surprised why there's again a clamor for investigation,” Chua said in an interview on ANC’s “News at 8.”
In 2005 probe, the investigating team was headed by former head of auditing SyCip Gorres Velayo & Co., Carlos Alindada while Energy Secretary Angelo Reyes convened another team from SGV and the University of Asia and the Pacific in May 2008.
On Tuesday reports said the DOE would launch yet another investigation into possible collusion. This new probe was set off again by the observation that the three oil companies have the same retail prices despite having different operational costs.
Chua defended the similarity, if not the slight difference, in the retail prices of petroleum products, citing the stiff competition in the industry.
“It's very simple. The market is very competitive and the consumers are very price sensitive…. when you go to any market the price of rice to any stall you go to or the price of pork will be practically almost the same within the same market. For us in the trading area, the price for our trading area, of oil companies, will be very similar,” he said.
He reiterated that the local prices are driven by the movement of cost of crude in the international market.
On criticism that oil firms would take longer to effect oil price reduction in light of lower crude prices in the world market, Chua said: “There’s a lot of pressure being made to bear on oil companies to moderate the increase. We’re able to pass it on and increasing it slowly. So when prices are going down, one would expect that the price reduction would also be moderated.”
“The problem is, of course, people like that when it's going down but when it's going up people then say hold on you need to moderate it,” he added.
Chua, however, said Pilipinas Shell is open to any investigation. He said the company regularly submits it monthly report to the DOE and quarterly to the Securities and Exchange Commission.
“It is something which goes with the territory. In a very volatile market, it is to be expected that there are lot of people who would be very interested in what’s happening with the prices,” he said.