'Deregulation also to blame for high LPG prices'

MANILA, Philippines - Aside from a supposed cartel, the deregulation of the oil industry is also to blame for the high prices and short supply of liquefied petroleum gas, militant umbrella group Bagong Alyansang Makabayan has said. Bayan said consumers shouldn’t be made to bear the burden of rising prices, especially if there is reason to believe that the alleged supply shortage was avoidable. "The de facto 'price cap' being imposed by the Department of Energy on an 11-kg LPG tank is meaningless given that fact that LPG prices have long been deregulated. Big oil firms retailing LPG can merely invoke market forces and supply and demand as basis for price increases," it said on its website. Even DOE’s price monitoring results posted on its website will show that several LPG brands are being retailed at more than P500, it said. As of January 21, Bayan said, Caltex LPG retails by as high as P520 in Metro Manila; Catgas, P525 and Philgas, P520, according to the DOE website posting. "Despite these price monitors, there have been no sanctions on the LPG retailers," it said. On the other hand, Bayan said deregulation has not been able to bring down prices and has in fact strengthened the cartelized nature of the LPG market. It added that despite the entry of the so-called "new players" under the deregulation regime, almost 92% of the domestic LPG market is still the turf of four firms. Petron accounts for 37.8% of the local LPG market, followed by Liquigaz (24.6%), Shell (20.5%), and Total (8.7%). Petron acquired the LPG retail business of Chevron in June 2007 and now retails the "Caltex LPG" brand. Total, on the other hand, has a 15% stake in Shell Gas Eastern Inc. through a joint venture with Shell. Liquigaz is a local subsidiary of SHV Gas, the world's largest retailer of LPG based in The Netherlands. "Any issue about 'shortage' should be adequately explained by these four companies. Any probe on lack of LPG must start on an investigation of these firms, which overwhelmingly control depots, terminals, and refilling stations and hold the widest network of dealers in the country," Bayan said. It added the country's four biggest LPG retailers (Petron, Liquigaz, Shell, and Total) have already implemented an identical P2 per kg hike in LPG prices. They claim that the international (Saudi Aramco) contract price of LPG has jumped from $336.5 per metric ton in December 2008 to $380 this month. But Bayan argued the Dubai benchmark as of December 2008 taken with the December average forex rates will show that retail prices of LPG for January should have gone down by P60.81/11-kg tank. - GMANews.TV