Reaction Paper

Shell, Eastern Petroleum hike oil prices

By ELLSON A. QUISMORIO

December 28, 2010, 8:35pm

MANILA, Philippines – Big oil player Pilipinas Shell and leading independent player Eastern Petroleum Philippines announced last night price hikes as high as P1 per liter on their fuel products.

Shell, in its advisory, said that it would increase all its gasoline prices by P1 a liter and diesel by P0.75 a liter effective past midnight Wednesday.

On the other hand, Eastern Petroleum Chief Executive Officer (CEO) Fernando Martinez said the company would implement a similar hike on their products later Wednesday.

“In fact we have advised our dealers of such movement today (Tuesday), but we will implement it at 7 a.m. Wednesday,” Martinez said.

No adjustment will be made on prices of kerosene.

Meanwhile, other oil companies contacted by the Manila Bulletin said they’ve “noted” the announcement of Shell and Eastern Petroleum but could not make their own adjustment official as of press time.

Local oil firms usually copy one another’s price movement within one or two days from the first announcement of a price tweak.

Two hefty fuel price hikes have previously been enforced this month. Last December 13, pump prices were raised by as much as P1.25 a liter while hikes reaching up to P1.50 a liter was implemented on December 7.

There was no price adjustment on the part of the oil firms last week, which ran through Christmas.

The latest hike, likewise, brought up the average prices for “main grade” fuel products to follows: diesel, P38 a liter; unleaded gasoline, P48.50 a liter and kerosene, P46.50 a liter.

Department of Energy (DoE) Undersecretary Jay Layug earlier told the public to brace for another pump price hike before the close of 2010, if only due to the movements in the international oil market.

Last week saw a surge in the Asian crude market wherein prices hit a two-year high of over $90 per barrel. The surge in international prices was due to speculations that oil demand would improve.

The Associated Press (AP) reported that the price of crude oil slid to $91 per barrel from $91.19. Despite the slight dip, the price remained relatively high considering that oil traded in the $70s for most of this year.

This reflects the price surge in the fourth quarter to a two-year high last week amid strong crude consumption growth in emerging economies and optimism that demand in the US is slowly recovering from last year's recession.

source: http://www.mb.com.ph/articles/295275/shell-eastern-petroleum-hike-oil-prices

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Personal Reaction:

Honestly, I don't like the idea of oil price hikes or any form of price hikes...but I have to live with it. There's nothing left to do but accept the fact that it would be implemented every now and then as they say "due to the movements in the international oil market"(for oil). I actually don't have my own car so I can say I'm not directly affected by the price adjustments. And maybe that is the reason why I can't figure out why people who own cars overreact hearing the news of such adjustments. Although, I understand that prices of almost everything increases now and that's not good. Maybe I will only fully understand everything when I get to pay for the bills and feed my own car. But then I realized that I'm somehow affected by the increase in oil price. First of all, our family own a car. My father gets to feed it and I see his reaction every time he hears the news of the increase. And like any other expenses, it means another adjustment in the budget I suppose. Another is that I ride jeepneys everyday. And oil price hike might anytime mean an increase in the jeepney fare. Now, I am directly affected. It is also a good point to notice that a peso might sound a very small amount if regarded as per liter. But the thing is that a car won't run and get you somewhere with just a liter of gas! Therefore, an increase per liter is a big thing already. It means an additional budget and expense to people earning the same amount of money.


Anyhow, I know that there is nothing that would stop the increase and the increases that will follow a day, months or years after the said increase. But I would like to suggest that oil companies specially the big ones(known co's.) lower there price increase. If they could only lessen 50% to it, it would already be a big thing. I put emphasis on the big companies because they usually determine the pump prices while other smaller companies/local oil firms copy their price movement. Another is that the government should take an action regarding the increases. They(e.g. DOE) could actually advice the companies to lessen/lower the increase or they could think of other ways on how to lower the price so that it won't cost much. What other ways? I do not know. I have no idea.. but I believe that the people responsible for the increase are more knowledgeable and they can suggest regarding this matter. For me, I could only recommend that they lower the increase in oil price.