[asia-apec 1083] Oil Price Hike: The Price of Full Deregulation

[BAYAN]

IBON Foundation, Inc. 
Press Release No. 99-7 
21 April 1999

Oil Price Hike: The Price of Full Deregulation

Oil companies have increased pump prices by as much as 50 centavos today 
(April 21) as they remain silent on IBON findings of intense profiteering 
in 1998. 

Analyzing the effects of deregulation of the downstream oil industry since 
1996, it is clear that the promise of lower prices and better services has 
been honored in the breach. 

What happened in 1998 is a glaring example of oil companies' zest for 
superprofits. Notwithstanding the decrease in crude prices due to 
oversupply in the world market, the consecutive reductions in pump prices 
towards the end of 1998 were not substantial. In fact, IBON computations 
even show that oil firms overpriced their products by as much as P1.7 
billion for the whole of 1998. This is already close to P200,000 per hour! 

Data from the Securities and Exchange Commission (SEC) also show that the 
Big Three (Petron, Shell and Caltex) also had a whopping 1,090% increase in 
profits last year. (See Table 1) Analyzing the oil firms' performance 
during the 1990s, their reported losses in 1997 are more than compensated 
by cumulative earnings reaching P37.5 billion from 1990 to 1998.

The current situation of increased crude oil prices from January to March 
1999, therefore, must be seen in this context. After all, in analyzing the 
oil firms' unpopular decision, one needs not just a sense of economics, but 
also a sense of history.

Table 1 

DECLARED PROFITS/(LOSSES) 
OF BIG THREE OIL FIRMS 

1997-1998 (in billion pesos)
1997 1998 /a Increase 

Petron (0.6) 3.7 430% 
Shell (1.5) 1.6 310% 
Caltex (2.4) 1.1 350%
TOTAL (4.5) 6.4 1,090%

Source of basic data: SEC 

/a revised as of April 15, 1999


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IBON Foundation is an independent research think-tank. For verification and 
details, please call Danny Arao, IBON editor-in-chief, at 713-2729 or 713-2737