Temperature compensation won’t lower oil prices
Please allow me to respectfully react to the letter titled “Making DOE understand temperature compensation,” dated Dec. 8, 2023. First and foremost, my more than 30 years’ experience in two of this country’s petroleum companies compels me to doubt the statement that the National Power Corp. (NPC) has been practicing the temperature compensation method in their diesel purchase from Petron Corp.
That is to say, the NPC pays for its diesel purchase based on the volume at 15 degrees Celsius, which is what temperature compensation is all about. As far as I humbly know—I stand corrected if I am wrong—the standard unit of marketing petroleum products in the Philippines, even worldwide, is volume at ambient temperature. This is the actual air temperature of the environment measured with a thermometer, generally higher than 15 degrees, and is a precise quantifiable value.
True, there are instances requiring other volumes or weights to be indicated in the sales document or invoice, such as liters, gallons, or barrels at 15 degrees, and metric tons or kilograms. The latter volumes are calculated by using certain volume correction and weight conversion factors, generally lower than 1, provided by the International Petroleum Measurement Manual.
Nevertheless, the originally measured air temperature volume is still exactly that which should be multiplied by the agreed unit selling price to arrive at the total invoiced amount. Matter, including oil, expands when heated, and contracts when cooled. Because ambient temperature is always lower than 15 degrees and the volume correction factors lower than 1, this scientific truth naturally makes the calculated volume at 15 degrees to be numerically lower than the originally measured volume at air temperature.
And so, when multiplied by the prevailing unit price, it ends up to a lower figure. Very well said, indeed! But if, by proposing the so-called temperature compensation method, the letter writer wants the Department of Energy to apply the agreed selling price to the numerically lower volume at 15 degrees and not to the originally measured volume at air temperature, then he better rethink it many times. That option is downright unfeasible and simply defies plain common sense!
RUDY CORONEL,
Batangas City
