NR0228: Big three using VAT, blaming small players to jack rates
News Release February 28, 2005
House of Representatives, South Wing Rm 602
931-6615 Ina Alleco R. Silverio, Chief of Staff
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Small oil players not to blame for recent oil price hikes; Big Three using proposal to impose VAT on oil products as an excuse to jack rates with impunity
Anakpawis Representative Crispin Beltran today said that the oil cartel led by Shell, Caltex and Petron were already taking advantage of the debate sparked by the bill proposing to impose value added tax on oil and petroleum products. The Big Three recently raised gasoline and diesel prices by 60 centavos and 50 centavos per liter respectively. They justified this latest increase by saying that the small players have jacked their own prices.
"Who are these oil companies trying to fool? They're have a stranglehold monopoly over the oil industry in the country -- they're the ones dictating the oil prices. The small players pose no genuine threat or competition to the monopoly of the Big Three. The small players have only a little more than a handful of stations all over the country, whereas Shell, Caltex and Petron have stations by the hundreds. What's more, the small players also get their petroleum and oil supplies from the oil monopoly, so their pricing mechanism is also based on that of the Big Three," he said.
Beltran said that the possibility of lifting of VAT exemptions on oil products have given the oil cartel another devious reason to jack their prices. "The bill hasn't been passed yet, but here we see the cartel already increasing their prices in preparation for it. If oil products are made VATable, it's dead-certain that they will pass it on to consumers, prompting increases in transportation and products of commodities and rates of services."
Beltran said that the public should take up Malacanang on its statement last weekend that it's all for the review of the oil deregulation law. "The review of the Downstream Oil Industry Deregulation Act of 1998 is long overdue. Since the deregulation policy was implemented, prices of oil and oil products have continuously increased. The enactment of Republic Act 8479 in 1998 gave oil companies in the country the legal right to independently determine prices of their products even without informing or seeking permission from the Philippines government," he said.
"The small players, in particular those that import oil from their own affiliates abroad like Pilipinas Shell, Caltex Philippines, and Petron, have the leeway to pad the real prices of their products. Such malpractice adds up to the burden of consumers since prices at the pump get even higher than the actual costs, which already include company profit margins. This year alone, gasoline prices have increased almost a dozen times nine times, with increases totaling to P5.35 - P5.50 per liter; diesel prices have increased eight times, with increases totaling P4.15- P4.30 per liter. The small players ar e not to blame for this, but the big three," he said. #