LKI PRESS STATEMENT 2020-051
August 14, 2020
LABAN KONSYUMER CALLS OUT DOE FOR FUEL PRICES MONITORING AFTER SHELL REFINERY CLOSURE
Consumer Group Laban Konsyumer Inc. (LKI) called out for government to watch closey the impact on fuel prices amidst the Shell Refinery Operations Closure, saying “we were relieved to some extent by the assurance of DOE Sec.Alfonso Cusi assuring there is enough oil supply. We still though ask for government to pay close watch and ensure that the closure of Pilipinas Shell Petroleum Corporation’s refinery operations will not result to fuel prices distortion, give Shell undue advantage on fuel prices vis –a-vis the independent oil traders , other importers, and the consumers. .
Atty. Vic Dimagiba , Laban Konsyumer President, stated “we understand that Shell may have felt the need to reduce local operating costs to keep pace with pure importers. The latter will likely have less fixed costs compared to oil companies with refineries. We also see that anyway, everybody adjusts weekly prices of the same amount whether with refinery or not.* This will probably not push MOPS prices higher, as Shell’s share of the local market likely is not that big to influence international fuel prices.”
LKI observed that “it appears consolidation of operations to save costs, given the low demand and low prices, and the reduced demand for petroleum products in the Philippines probably could not justify keeping a local refinery alive. In any case, LKI urges those in the sector to assess and evaluate the possible impact of Shell’s decision on the market supply and prices of fuels as well as competition. They own at least a third of the Philippine market. There must be an in-depth study into the shift from refinery to importers and if this equals the same, where Shell can save and profit from this decision and impact on supply and prices.”
Dimagiba said “we expect the DOE to closely monitor the conduct of a successful transition to a full import terminal operation and the impact of such transition to its employees. We hope consumers are still protected, as well as their welfare in terms of prices, as Shell will continue to fill in their market share through the importation of refined products. The continued strengthening of the peso will likely favor importers in terms of reducing input costs. However, should the peso depreciate, then Petron with its refinery will be less affected versus importers. We hope that DOE pricing formula inputs the peso to dollar in real tme. There must be close watch if there is any advantage for Shell as an importer now of finished fuels on matter of pricing especially on weekly adjustments of similar amounts versus competition including Petron, and the consumers.
*Pending with the Philippine Competition Commission on complaints for price fixing.