Are we at the mercy of oil companies?

July 11, 2024

MANILA – Last Tuesday was the fourth straight week that oil companies increased the prices of diesel, gasoline, and kerosene. Since June 18, the price increases have amounted to a total of P4.80 per liter for both gasoline and diesel. The latest oil price increases easily shaved off any gains we derived from the previous two-week downward price adjustments. June 4 through 11 adjustments resulted in a total of P1.50 for gasoline, P1.20 for diesel, and P1.30 for kerosene.

The fluctuating prices of oil at the pump are on the upward trend as year-to-date adjustments for gasoline, diesel, and kerosene stand at net increases per liter of P10.85, P9.05, and P2.35, respectively, as of July 9, according to the Department of Energy (DOE).

Tuesdays have become dreaded by motorists and car owners due to their association with oil price hikes.

What determines the prices of crude oil (unrefined petroleum)? According to Statista.com, “[a]s with most commodities, crude oil prices are impacted by supply and demand, as well as inventories and market sentiment.

“However, as oil is most often traded in future contracts (whereby a contract is agreed upon, while the product delivery will follow in the next two to three months), market speculation is one of the principal determinants for oil prices. Traders make conclusions on how production output and consumer demand will likely develop over the coming months, leaving room for uncertainty.”

To put it briefly, dear readers, oil prices are not solely determined by the usual expenses associated with oil production. A major factor is “market speculation” since crude is traded in the global market.

Gas prices at the pump largely follow the cost of crude oil, which is the biggest