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Wednesday, June 17, 2009

‘Stay focused on addressing oil price volatility’—Recto

Socioeconomic Planning Secretary Ralph G. Recto said that the National Economic and Development authority (NEDA) should "not be
distracted from keeping prices stable, including that of oil, to help consumers anticipate and handle price changes."

"Despite grumblings of Energy Secretary Angelo Reyes, we should be forward-looking and stay focused on addressing oil price volatility. In
fact, we are happy this is now being talked about since our concern is that in the current framework of a deregulated downstream oil industry, somebody
must take the side of the consumers. And we are the one taking their side," said Recto, who is also NEDA director-general.

In July last year, crude reached more than US$130 per barrel and consumers reeled from the high pump prices. They took a breather though when crude
plunged to about US$40/bbl but prices are again on the rise and this does not bode well for the economy as well as the consumers. Today, Dubai crude
is about US$70/bbl.

Recto clarified that: "It is not our intention to pick a fight or quarrel with anyone especially during these challenging times. We certainly value a
united Cabinet as well as cooperation among its members. But we cannot be sitting silently as an oversight agency in charge of national development
in this situation of volatile oil prices when we know just how much oil prices impact on the economy".

He explained that both the national economy and the consumers have "very little fiscal space and are very sensitive to prices".  Thus, reduced fuel
prices translate to lower transport costs and lower food prices, which he noted "benefits all especially the poor, as their purchasing power increases".

The NEDA chief earlier warned of changing oil prices and the need to temper this to flatten out the volatility and cushion the impact on the economy
and the consumers. "So we sought ways to address this issue. We came up with our own computations and went over these numbers with Secretary Reyes
last year. He had said then that oil companies keep a 30-day inventory and thus, we factored that in when we talk about current pricing. We also have
included VAT in our pricing computations," Recto said.

He added the NEDA computations serve as a benchmark to say if oil prices are expensive or not.

Recto related that in a May 29 meeting with the Energy Department and oil companies, it was agreed that the latter would submit their audited
financial statements for NEDA's review with the end goal of coming up with a fair and transparent pricing system. Upon reviewing these statements,
Recto said NEDA still needs additional data from the oil companies pertaining to sales, cost build-up, production cost, paid taxes, supply,
demand, and market share.

The socioeconomic planning secretary also debunked Reyes' statement that the NEDA personnel are unaware of the agency's computations. He noted that
the NEDA Chief of the Industry Division of NEDA's Trade, Industry and Utilities Staff made the presentation in the said meeting.

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