Making a killing from oil

EDITORIAL

The profits of the Big Three oil firms are rising as rapidly as the increasing oil prices, with a record of at least P141.7 billion in profits in the last decade, one main reason why the country’s Oil Deregulation Law should be repealed or amended.

This is more than the combined income of the country’s poorest 2.36 million families– amounting to Php114.3 billion in 2009, research group IBON said.

IBON Foundation, Inc. is an independent development institution established in 1978 that provides research, education, publications, information work and advocacy support on socioeconomic issues.

The figures debunk the Big Three’s claims that local price hikes are needed so that they can recover losses from the global oil price movements. With this IBON said the call for real transparency in the domestic oil industry remains urgent to make sure that the Big Three is not profiting at the public’s expense.

The local price of diesel increased from P13.96 per liter in 2001 to peak at Php44.31 in 2008 before falling slightly to P41.26 in 2010. The price of regular gasoline meanwhile increased from Php16.58 in 2001 to P45.92 in 2008 and then further to P48.73 in 2010.

At the same time, the net income of Pilipinas Shell increased six-fold from P3.1 billion in 2001 to Php19 billion in 2008 and then P16 billion in 2009 with total net income over the 9-year period reaching Php73.0 billion.

The net income of Chevron increased eleven-fold from P1 billion in 2001 to P10.7 billion in 2007 then P8.6 billion in 2008, before dipping to P8.3 billion in 2009. Its total net income over the period 2001-2009 reached P40.2 billion.

Profit data for Petron is incomplete but its profits increased from P1.2 billion in 2001 to P6.1 billion in 2007, totaling P28.6 billion over the 7-year period. It has reportedly booked Php1.9 billion in profits in the first quarter of 2010 alone.

Globally, mother companies of the Big Three firms are also raking in superprofits with the oil price hikes. The price of Dubai crude increased from an annual average of US$22.70 per barrel in 2001 then peaked at US$ 94.80 in 2008 before falling to US$78.10 in 2010. The price of Dubai crude has again begun to rise rapidly and is already at some US$120 per barrel.

The profits of Royal Dutch Shell more than doubled from US$10.9 billion in 2001 to US$26.3 billion in 2008 and fell slightly to US$20.1 billion in 2010. Its total profits over the decade 2001-2010 reached US$192 billion – or more than the value of the Philippine economy, measured by gross domestic product (GDP), in 2010 of US$189.0 billion.

The profits of Chevron in turn increased over seven-fold from US$3.3 billion in 2001 to US$23.9 billion in 2008 before dipping to US$19 billion in 2010. Its total profits in the last decade reached US$128.3 billion.

These figures show that the global and local oil price increases have benefited the oil monopoly tremendously. Locally the deregulation and its principle of automatic price adjustments have allowed the Big Three to amass huge profits while further strengthening the industry “cartel.”

With this, IBON reiterated its position against the oil deregulation policy, which “encourages such gross profiteering at the expense of Filipino consumers.”