MANILA—The oil companies raised fuel prices Tuesday in what observers described as a “blip” because industry fundamentals still point to a downward trend in prices well into 2015.
Petron raised the price of its gasoline products by P0.30 per liter and kerosene by P0.10 per liter, from 6 a.m. December 30. There was no change in diesel prices. Shell, Chevron, and Seaoil raised gasoline and kerosene prices at similar rates six hours earlier 12:01 a.m.
These price movements, which were attributed to a “correction” in prices in the international market, brought the total year-to-date net decrease in the prices of major fuel products to P11.54 per liter for gasoline and P13.48 per liter for diesel.
Analysts said despite this week’s price hike, prices would likely stay below $70 a barrel or even drop lower compared to the $100-a-barrel level at the start of 2014. They said it would take a lot of producers to curb output or leave the market before supply goes low enough against demand to push prices up. That tends to take a long time with crude oil, metals, and other commodities produced from capital-intensive, long-term projects.
Investors might suspend new oil well drillings, but as long as they have cash flow, they will keep pumping on wells they developed over many years — even if prices are down, according to the analysts.
On the plus side, the overall drop in prices has virtually stopped oil smuggling and has eased the overall cost of doing business due to cheaper transport costs, among others.
Energy Secretary Carlos Jericho L. Petilla said in an interview that reports of smuggling have been largely unheard of lately. He hoped investors would focus on new energy projects which may come into production by the time commodity prices go up again.
The Department of Energy’s Undersecretary Zenaida Monsada said, “While we are happy for consumers because they can spend more with low oil prices, we also hope oil firms will think long-term and invest in facilities while the cost of doing business is low.”
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