Oil Price Difference Between the Philippines and Saudi Arabia

It is very alarming that both local (Philippines) and international news this month are all about the oil price increase.

I may not be an economist or have any knowledge on how our country's oil companies has been determining the prices of gasoline and other petroleum products. I don't know either the real reasons for the unprecedented increase in oil price that has crossed $140 per barrel!

Be that as it may, however, I cannot comprehend the huge margin of prices of petroleum products between the Philippines and here in Saudi Arabia, although you may say that the key factor is that the latter is one of the largest producer of oil.

For a fact: a liter of diesel here costs SR0.25 ($0.067). If, for instance, the current exchange rate is P44 to a dollar, then that makes it P2.95 per liter only! Gasoline-91 is SR0.40 ($0.12) or P5.28 per liter, and gasoline-95 is SR0.70 ($0.187) or P8.23 a liter. An 11-kg LPG is SR15 ($4) or P176.

Very huge margin, isn't it?

Malaki ba talaga para sa oil companies ang cost of production? O talaga bang sobra-sobra na ang pinapatong na taxes ng gobyerno natin? O totoo na may cartel na nagko-kontrol sa mga presyo?

There is no point in accusing the Organization of Petroleum Exporting Countries as the prices are not determined by OPEC but by market factors.

Even King Abdullah of Saudi Arabia said in an Arab News newspaper interview: "Consuming countries should reduce taxes of petroleum products if they really wanted to soften the burden on consumers."

And would you believe that the current prices of diesel and gasoline here are about 30% lesser as compared two years ago? The king issued then a royal decree, decreasing the prices of diesel and gasoline to help ease the burden of an average-earner Saudis and expatriates like me. Can we not do similar to that in our country?

The sad thing is this: I had seen our legislators being interviewed on tv on how they can cope the oil price increase. Hijo de cobra naman, converting your cars from a gasoline-run-engine to an LPG-run-engine is not the answer to the real problem as it only serves you and not the consumers na nagluklok sa inyo dyan!

It's time for our legislators be a real legislators - in every sense of the word.


marlon said...

good point. but as the population and economy of other 3rd world country grows the oil demand keeps on growing. supply is getting shorter. means presyo is mataas lalo. US alone as they commented "is very addicted to oil". freeways in california no matter how expansion of lanes they improve before the project get completed its already congested. every kids when it turns 18 they owned a car. plus folks on the mid class has 2 or 3 different cars 1 for formal and 1 rough road usage. do the math.. oil consumption increases exponentially every year. China and India as they analyze has the biggest effect on oil shortage for obvious reason. more people can afford cars. US I guess is pushing Saudi to double their production but never know how effective it is. US passes long time ago " No Oil Drilling in US soil" which is now reaping the consequence. Alternative solution like ethanol is not sufficient for supply. US started to feel the pain of the price. Sa atin matagal na. etong price hike will stay ng matagal. solution is eminent. implementation already started but b4 daw mapakinabangan it will take 5 to 10 yrs.. tagal no :(. now drilling project is on going in canada they recently discover a huge oil mine which they said
US can totally rely on for long term years of supply. lets do our share !!! kabayo na lang an gamiton nato.. Padi tama yuon pabakalan ko gihapon ikaw sin raising basi gamiton mo na lang padara sin surat or bagahe..wat do u tink?

jing said...
This comment has been removed by the author.
jing said...

nice comment marlon... the saudi aramco (saudi american oil co. is now increasing its production of oil per day to cope with the demand but i don't think this alone can stabilize the price... please check this too: http://www.arabnews.com/?page=1&section=0&article=110936&d=16&m=6&y=2008&pix=kingdom.jpg&category=Kingdom

...and i hope you can check my other blog at http://bulanonsasaudi.blogspot.com/2008/08/driving-la-saudi.html ...thanks!

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