The recent announcement by local oil companies that they would need to increase oil prices by as much as P10 to P11 per liter highlights the urgency of reinstating regulation of the oil industry, according to independent think-tank IBON Foundation.
IBON said that deregulation has not affected the domination of the three major oil companies (Shell, transfer pricing. and Chevron) of the local petroleum market. Instead, it has merely given the oil giants more room to manipulate pump prices since their transactions with their parent companies abroad have become even less transparent with price adjustments no longer subject to public hearings. The unregulated environment gives oil firms greater freedom to overprice and engage in
The think-tank further pointed out that the recent P1.50 hike in pump prices implemented at the end of May was the largest hike since October 2001 when average retail prices went up by P1.20 per liter. It added that the oil companies are threatening even higher weekly hikes of P2 per liter allegedly to speed up recovery of their costs.
Data from the Department of Energy show that the three major oil players continue to control the bulk of the downstream oil market since the 60 new entrants that have entered the sector since 1998 accounted for an average of only 12% of total market share since the oil industry was deregulated.
IBON added that high world oil prices remain a result of the dominance of a few giant oil transnational companies – such as Royal Dutch Shell, Chevron Texaco, Total and – over the global oil industry. Oil prices are pushed up further by unhindered speculation in global oil futures markets. The monopoly of the oil giants over the downstream and upstream levels of the industry makes them immune to the effects of and allows them to dictate the prices at which they sell their products independent of changes in .