A study by the National Economic and Development Authority (NEDA) showed its estimates of what should be the reasonable oil price level—P8 lower than pump prices—is closer to estimates by energy expert Marcial Ocampo.

In a study titled “An Estimation of Gasoline Prices,” Ocampo’s estimated gasoline pump price per liter of P33.69 using a cost-buildup approach is still almost P2 higher than the P32.21 estimated by NEDA for April.

Ocampo’s approach was included in the study to compare estimated gasoline pump prices that NEDA chief Ralph  Recto has insisted should be lower than what they are at pumping stations that time.

The average gasoline pump price per Department of Energy oil monitor was at P38.96 using average Mean of Platts Singapore gasoline price of US$60.74 per barrel for April 10 to 21, 2009. The price is P0.50 lower with a cost build-up approach using April 2009 average MOPS gasoline price of $60.46 per barrel and a foreign-exchange rate of P48.19 to the dollar.

The study was presented to the Department of Energy staff including Secretary Angelo T. Reyes late May, Socioeconomic Planning Secretary Recto told reporters last week. “Look at the study and tell me if we don’t know what we’re talking about,” the NEDA director-general added.

The presentation said that NEDA arrived at its figures via a “straight-line interpolation” using MOPs and the Dubai Crude Oil (DCO) prices as well as a cost build-up approach.

The study also used February and March 2005 as reference period since the “trend in increases in DCO and pump prices from January to April 2005 is similar to trend during the same period this year.”

The April 16, 2009 peso price of US$50 DCO was at P2,408/bbl (US$1=P48.16) while February and March 2005 prices stood at P2,176/bbl and P2,495/bbl, respectively, according to the paper.

With a $50 DCO price/bbl and a foreign exchange rate of P48.16-US$1, the gasoline pump price at April 2009 should be at P28.71 per liter for gasoline and P24.94/liter for diesel.

Adjusting to include 12-percent value-added tax, the NEDA arrived at its estimated gasoline price of P32.16/liter and P26.11/liter for diesel.

To note, the study said the government collected last year a total of P20.064 billion on income, value-added, excise and other taxes on oil.

NEDA’s estimated gasoline price was P8.69-lower than the P40.85 prevailing gasoline pump prices as of April 16, 2009.

The NEDA study, prepared by the Industry Division of NEDA’s Trade, Industry and Utilities Staff, recommends protecting consumers by having “a transparent and fair pricing system” as oil prices have an inflationary effect of 0.066 percent.”

It also recommended to the government’s executive branch to “push for tools to protect consumers and strengthen the regulatory oil industry framework.”