My Pandacan 1011 | Manila, Philippines

This question appears logical and reasonable at first glance.  But
it is worth understanding that countries where markets are open like
Singapore, Hongkong, Australia, United States, United Kingdom, France,
among others, similarly reflect international oil prices immediately,
some on a daily basis like the US and Thailand, and others on a weekly
basis like Hongkong and Singapore. The main reason for this is to
ensure pricing transparency, such that what the public sees in the
international market, whether prices are going up or down, are
immediately reflected in the local market. 

To explain further,
refiners and finished product importers have different inventory
levels, with refiners having about 40-60 days of stocks, while product
importers normally maintain about 7-14 days of stocks. 

As has
been observed in the market, when  prices are increasing, which is what
is happening now, even if refiners hold a longer term inventory of say,
45 days,  if they continue to sell at lower prices  till they use up
their inventory, this may be seen to be undermining competition.  

Conversely,
when prices are dropping, product importers will immediately reflect
the current lower prices, which refiners are forced to match in order
to remain competitive. For how will they make the public accept a
delayed price reduction, just because they have stocks bought at high
prices?  How will the public know what inventory levels and days they
should wait before prices are reduced? Will the oil companies not be
accused of delaying price reduction to make more money? 

For the
above reasons, reflecting current international oil prices is the most
transparent way of pricing and therefore, the norm in open markets.
Currently, the utmost urgency is in ensuring supply security and
mitigating the impact of the price increases to the public, especially
the disadvantaged sectors. 

In support of the Government, we in
Pilipinas Shell Petroleum Corporation (PSPC), have increased our crude
and product inventories at maximum levels of at least 60 days, to
ensure continuity of supply to meet our customers’ requirements,
notwithstanding the associated higher costs of doing so. 

Further,
to mitigate the impact of higher oil prices on the public, we are
maintaining close to 150 Shell Pepeng Pasada Club Loyalty and DOE lanes
that offer discounts to public utility vehicles.  We likewise remain in
support of  the Government’s advocacy on energy efficiency and
conservation. 

This is a time to engage and help calm the public,
and to plan for contingencies. We continue in our aims of working
together towards helping the Philippines address the ever-increasing
challenges of our changing world.