OIL industry sources in the Philippines disclosed that some oil companies in the country have been forced to close several service stations due to losses in revenues caused by the implementation of Executive Order 839 that mandated a freeze of pump prices in Luzon following the devastation of recent typhoons.
Sources said several stations in Metro Manila have decided to close because of the dealers’ inability to absorb the losses brought about by EO 839, which directed oil firms to revert their pump prices back to October 15 levels in areas placed under a state of calamity after the devastation caused by tropical storm “Ondoy” and typhoon “Pepeng.”
“Stations running out of supply due to EO 839. Jetti in Binangonan, Rizal; Orange station and Shell along Imelda Avenue, Cainta are now closed due to lack of fuel supply,” the source says.
Sources said several stations in eastern and southern Luzon decided to either undergo rationing or close their stations early to manage demand and supply.
“Some retailers in the provinces in eastern and southern Luzon have decided to shut down their third shift from around 10 pm and beyond. As a result, there are some layoffs or forced leave of small employees,” the source says. Sources say that some independent players have already cut their service hours by four to five hours daily.
Another industry source said that there should be a new price increase of 25 to 50 centavos per litre, but the EO prohibits the oil companies from adjusting prices.
“Based on MOPS (Mean of Platts Singapore) and foreign exchange, prices should have gone up by P0.50 per litre on gasoline and P0.25 per litre for diesel,” the source says.
Petron Corporation had reportedly cancelled some contracts for diesel importation. Publicly-listed Petron, the country’s largest oil refiner, also informed the Philippine Stock Exchange that it would incur substantial losses which would reach more than P1.5 billion if the EO will continue.
As a refiner, Petron has 30 to 40 days inventory while oil importers normally have 15 days or two-week inventory.
As of November 3, Dubai crude averaged $76 per barrel from $73 per barrel a month ago while unleaded gasoline imported from the region went up to $80 per barrel from $78 per barrel.Diesel average in MOPS, benchmark of oil importers, likewise went up by $4 per barrel to $84 from $80 per barrel last month. Pump prices of unleaded gasoline are being sold at a range of P35.10 to P38.07 per litre and diesel at P26.60 to P31 per litre.
Cooking gas or liquefied petroleum gas should have also gone up by P4 per kilogram as the contract price of LPG went p to $589 per metric tonne (pmt) from $586 pmt last month. LPG is presently sold at a range of P543 to P612 per 11-kg tank. Some business groups are already wary about the impact of the EO on the overall supply of petroleum products in the country.
Malacañang says that there is no reason to be alarmed over the reported closures of some gasoline stations because of the price freeze.
Executive secretary Eduardo Ermita says that the Department of Energy is already looking into the reported closures as well as the supply shortages in some of the gasoline stations. “I’m sure that is already being done by the DOE, because we don’t want a situation where there is a shortage of supply to the detriment of consumers,” Ermita says.
