Solons demand full audit report vs. oil firms over price hike

The recent rise in the world market prices of oil should not be the cause of the current increased prices of petroleum products, as these were bought at a lower price a month ago, according to Zambales Rep. Ma. Milagros Magsaysay.

Magsaysay pointed out that the big oil companies have a 30-day inventory. This means that their supplies at any given time were bought a month before at the prevailing market prices, which are usually lower.

However, she noted that whenever the international prices of oil increase, the oil companies promptly bring up their prices, even though what they are selling were bought at a lower price.

Noting that the price of oil in July was about $72 per barrel, Magsaysay said the price of oil products being sold now should be based on this price, and not the higher August price.

“So you procured gas at $72.83 in July. How come there is an August price increase when you still have stock? How come after a few days you increase prices when you still have inventory? I’m wondering now how come these companies can increase prices when they claim to have a stock of 30 days,” she told a hearing of the House Committee on Energy.

She said the increase in the international price of oil this month should only be reflected in the next month’s prices.

Pampanga Rep. Juan Miguel Arroyo said it was clear the oil companies could still afford to bring down their prices, “they will not lose money if they bring down their prices.”

Chevron representative Mark Quebral said inventories were not a factor in pricing because what the oil firms go by is replacement cost.

Quebral said the oil companies have to raise their prices when world market prices rise because they would then use the profits to buy future supplies.

“If we sell at the current price, what do we use to buy the next product?” he asked.

Magsaysay directed the Bureau of Internal Revenue (BIR) to submit copies of all payments made to it by the oil companies. She also asked the Bureau of Customs and the Department of Energy for the records of their importations to check if the companies have been paying the correct taxes.

Arroyo, chairman of the House Committee on Energy, has given the BIR a one-week ultimatum to submit an audit report on the financial statements of the country’s top three oil distributors.
Arroyo issued the ultimatum as he accused government agencies tasked to conduct the audit of failing to protect the interest of the public against the unabated hike in prices of petroleum products imposed by the Big Three oil players.

He noted that prices of petroleum products have been soaring in the past several weeks despite reports of a downward trend in prices in the world market.

During a recent congressional hearing, Arroyo asked BIR representative Jethro Subarsiaga to submit its audit report on Petron, Chevron and Shell after the representatives from the country’s biggest oil industry players presented no objection.

The Pampanga solon said the audit report should be submitted next week. However, he did not mention any possible sanction against the BIR should it fail to heed the directive.