Marikina Representative Stella Quimbo urged to instantly jumpstart the House probe on the Department of Energy (DOE)’s pricing formula and policies that may be promoting implicit collusion or parallel pricing among the oil companies.
According to a Manila Bulletin report, Quimbo made the call as oil companies announced a rollback in pump prices amounting to P0.30 per liter of gas and P0.40 per liter of diesel.
“Is this truly good news? Price announcements by all oil companies are generally the same amounts and implemented the same time each week. The simplest explanation of such parallel behavior is the DOE policy that recommends all oil companies to apply price adjustments every Tuesday based on the global price index for all called Mean Platts of Singapore (MOPS),” Quimbo was quoted as saying in the report.
Using the energy department’s suggested pricing formula, oil firms will necessarily arrive at the same weekly price adjustment because the applicable MOPS is the same for all.
“However, the price adjustments that consumers will face when they gas up are not necessarily the same as what companies submit to the DOE. Actual prices will be lower in areas where gas stations face effective competition, and higher with less competition. So even when oil companies announce rollback based on MOPS, it is possible that prices will actually increase based on market conditions,” Quimbo expressed in the report.
She called to junk DOE’s pricing formula, stating that it not only unnecessarily increases oil prices to the detriment of consumers but also impacts both consumer protection and market competition.
“There are two concerns. One is that the system of reporting price adjustments is misleading to a consumer. The expectation is a rollback but reality could be a price increase. The best way to protect a consumer is to arm him or her with accurate information. The other concern is that the DOE’s pricing formula provides a reference which oil companies can use as a basis for implicit collusion. This is why I filed House Resolution No. 390 which calls for an investigation on the propriety of DOE’s pricing policies. I hope this resolution is taken up at the soonest possible time,” Quimbo expressed.
She urged for the Lower Chamber and other concerned stakeholders to all work together to protect consumers and promote market competition.