Chiz warns of oil price tsunami

Opposition Sen. Chiz Escudero yesterday warned of a possible oil price surge next year as economies worldwide begin to recover from the recession and called for urgent action by Congress to revise the oil deregulation law.

“The latest round of fuel price increases reflect developments in the world market that we should prepare for, lest we all fall victim to an oil price tsunami,” the 40-year old lawmaker said.

Last Monday, four oil companies jacked up diesel and gasoline prices by P2 and P1.25 respectively. According to representative of oil companies, the price increases were justified by the rise in the price of oil in the international market.

In a meeting with energy department officials, they said that the price of unleaded gasoline rose from $72.52 a barrel to $76.24 while diesel went up from $74.01 to $80.04 from Oct. 5 and 9.

Petron and Shell compute their prices based on the price of Dubai crude while Chevron/Caltex and other small players use the MOPS (Mean of Platts Singapore) as their benchmark.

Escudero pointed out that crude oil only cost $10 per barrel in January 1999. Before the credit crisis struck the US last year, there were projections that fuel prices could even shoot past the $100 level because of increased demand amid the dwindling supply of oil worldwide.

While the country has reduced its dependence on imported oil from 92 percent in 1973 to less than half today, he said that the poor is hardest hit by any increase in fuel prices.

“Our country’s poor and dwindling middle class bear the burden most and they constitute a far greater portion of the population. If an oil price tsunami happens, its effects will be far worse than the devastation wrought by Ondoy and Pepeng,” Escudero said.

The senator from Sorsogon called on his colleagues in the Senate to prioritize the action on proposal to amend or repeal the oil deregulation law when it resumes session after the current recess.#