Press Release
March 1, 2011

What happened to 30-day inventory?
Oil firms just cashing in on Middle East unrest

Not so fast. Sen. Ralph Recto yesterday said oil companies are just cashing in on the Middle East conflagration in announcing a new round of oil price hike Tuesday.

Recto said with a minimum inventory of 30 days, an oil company should have already ordered its fuel stock for March 1 to 31 and should be immune from global oil price upheavals at least for a month.

"We beg oil companies to hold off their greed even if it would be a lame attempt to show to the public that they are really sensitive to the people's already dire situation," Recto, Senate ways and means chair and Senate energy panel member, said.

He said for oil firms, which are honest enough to declare an inventory of 30 days, their price increase should come not earlier than two weeks or even next month.

"Brushing up on our economics 101, the 'first in, first out' should apply for oil stocks bought at old prices while those procured at new prices should be sold based on their marked up price," Recto said.

He said oil companies are engaging in "speculative oil trading" by planning to impose a P2 per liter increase in gasoline and an additional P1 per liter for diesel just because of the unrest in Middle East with Libya now as the focus of pro-democracy protest rallies.

The senator said motorists and other fuel-dependent sectors in Visayas and Mindanao should even brace for higher oil prices since the increase in pump prices could go up in those areas by as much as P5 to P8 per liter.

Recto also rejected a Department of Energy official explanation that oil companies should right away reflect global price movements in their pricing to avoid local price shocks.

"The only shock that should be avoided is the fact that some energy officials, despite the change in government, still appear to be speaking in behalf of the oil behemoths," he said.

The senator likewise reiterated that oil companies should observe a 30-day inventory for its fuel stocks and effect price hikes only when their 30-day supply is depleted.

Oil firms, using the uptick in global oil prices triggered by the brewing unrest in the Middle East as convenient alibi, jacked up their pump prices Tuesday by as much as P2 per liter for gasoline and P1 for a liter of diesel.

Oil players initially effected an increase of P1.25 per liter for gasoline and P1 for diesel but are poised to impose a second round of price hike this week.

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