JOINT PRESS BRIEFING ON PRICES AND THE ECONOMY

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JOINT PRESS BRIEFINGON PRICES AND THE ECONOMY
January 28, 2000 Energy Center Complex
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FREE MARKET ENVIRONMENT

• Getty
• Filoil
• Mobil

Caltex Shell Esso (Petron)
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REGULATED ENVIRONMENT
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RA 8479
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INVESTMENTS OF NEW PLAYERS (in billion pesos)
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MARKET SHARE OF NEW PLAYERS
1999 YTD OCT
By Sector LPG 18 Industrial 13 NPC 6
Reseller 5
363 MBCD

8.4 31MBCD
35.5 129MBCD

35.4 128MBCD
20.7 75MBCD
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(No Transcript)
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OIL PRICING MECHANISMS

• Regulated
• Return on Rate Base
• Actual crude import cost
• RA 8479 transition APM
• Change in Dubai spot prices and
• forex

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DUBAI CRUDE PRICES (dollar per barrel)
50
40
30
20
Dubai (/bl)
10
0
Jan-
Feb
Mar
Apr
May
June
July
Aug
Sep
Oct
Nov
Dec
Jan-
Feb
Mar
Apr
May
June
July
Aug
Sep
Oct
Nov
Dec
Jan-
Feb
Mar
Apr
May
June
July
Aug
Sept
1997
1998
1999
10
FOREX
50
Forex (P/)
40
30
20
10
0
Jan-
Feb
Mar
Apr
May
June
July
Aug
Sep
Oct
Nov
Dec
Jan-
Feb
Mar
Apr
May
June
July
Aug
Sep
Oct
Nov
Dec
Jan-
Feb
Mar
Apr
May
June
July
Aug
Sept
1997
1998
1999
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DUBAI CRUDE PRICES (peso per liter)
1998
1999
1997
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COMPARATIVE DOMESTIC PRICES
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APM vs PUMP PRICE (as of December 1999)
in peso per liter
exclude APM for margins of dealers and haulers
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REGIONAL PRICES December 1999
in peso per liter
as of November 1999
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1999 Petroleum Product Price Movements
(Peso/Baht per liter)
Unleaded (Manila)
Unleaded (Bangkok)
Diesel (Bangkok)
Diesel (Manila)
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ENERGY MIX
1973
1999
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TRANSPORT SECTOR
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Impact of oil price hike on fares

• Transport operators assure no immediate fare hike
  petition
• shipping rates raised 5.22 in July 99 to
  reflect fuel price hikes from December 1996 to
  May 1999
• Land transport fares hiked Oct. 99 to reflect
  diesel price hikes from Jan.98 to Sept.99 and
  increases in spare parts and TBAs
  (tires,batteries accessories in the last two
  years)
• President Estrada has directed the lowering of
  MRT rates

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DEPARTMENT OF TRADE INDUSTRY
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Factors Affecting Commodity Prices

• Oil expense is a small portion of total
  production costs
• Fierce brand-to-brand competition continue to
  pressure manufacturers to keep prices stable
• Low-income consumers of basic commodities are
  highly price-sensitive

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COMMODITY PRICE TRENDS

• Prices of basic and prime commodities have
  remained generally stable, if not lower, in spite
  of seven consecutive oil price increases in 1999
• Dressed chicken down 15
• Refined sugar down 20
• January 2000 prices of processed milk, flour, G.
  I. Sheet, and steel bars are actually lower
  compared to January 1999 levels. In some areas,
  the price of detergent dropped 47

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NATIONAL ECONOMIC DEVELOPMENT AUTHORITY
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REGIONAL PRICES(Pump price in Peso per liter,
November 1999)
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OIL PRICE CHANGES IN 1999(Year-on-Year Growth
Rate)
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COMPARATIVE PRICES(Peso per liter, December 1999)
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INFLATION ON THE DOWNTREND ..
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SUMMARY

• Deregulation and market liberalization have kept
  prices of commodities generally stable and lower
• The impact of oil price hikes on prices of other
  commodities and the economy can be tempered and
  kept at a minimum
• Government agencies are working closely together
  to minimize impact of commodity price adjustments
  caused by external factors