DOE: Higher fuel costs to discourage demand, roll back prices
Filipinos may yet see a reprieve in the steady rise of oil prices enhanced by the invasion of Russia on Ukraine, as an official of the Department of Energy said the higher cost of fuel will eventually discourage demand and lead to rollbacks or drops in pump prices.
“When prices are too high, demand will drop, and if it goes below the-one million [barrel] supply deficit, possibly, in a matter of days or months, an oversupply will occur and there will be rollbacks,” DOE Oil Industry Management Bureau Director Rino Abad said in an interview on Dobol B TV.
This developed as the Land Transportation Franchising and Regulatory Board (LTFRB) on Saturday said it was studying proposals to increase the minimum fares in commuter jeepneys to P10 as petroleum prices continued to rise.
“We continue to study this, a petition is pending before us, and it is set for a hearing on March 8,” LTFRB Executive Director Maria Kristina Cassion said in a televised briefing on PTV.
Motorists should brace for another round of price hikes next week, which would mark the ninth straight week of increases since the beginning of the year, Unioil Petroleum Philippines said on Saturday.
In its fuel price forecast for March 1 to 7 trading week, Unioil said the price per liter of diesel may increase by P0.80 to P0.90. Gasoline prices, meanwhile, may go up by P0.90 to P1.00 per liter.
Gasoline prices are expected to go up as Russia faces economic sanctions, Political Science and International Relations Professor Anna Malindog-Uy earlier said.
But the Energy department’s Abad cited the outlook of the Organization of the Petroleum Exporting Countries-International Energy Agency (OPEC-IEA) of a supply shortage of one million barrels per day to give hope of ending the spiral in oil prices.
“We can’t do anything about the one-million-barrel shortage because OPEC sticks to its output of 400,000 barrels each day per month,” he said, as DOE is still pushing for the suspension of the excise tax on petroleum.
The technical working group under the House committee on ways and means has already drafted a position to suspend excise taxes, Abad said.
“The total excise tax for gasoline is P10, diesel P6, and LPG P3. These are the maximum amounts that can be temporarily suspended… subject to full discretion of Congress,” he added.
Trade Undersecretary Ruth Castelo said Russia’s invasion of Ukraine would cause oil prices to go up but added this can be cushioned by a TRAIN Law mechanism that would suspend excise taxes if oil prices surpassed $80 a barrel.
The Department of Finance earlier thumbed down proposals to suspend the collection of excise taxes on petroleum products, saying it could impact the budget for pandemic recovery measures.
Abad, however, said the Palace still has no official position about the suspension of oil excise taxes.
He said that the DOE monitored this week that the price of premium gasoline stands at around P70 per liter, while diesel’s common price stands at about P68 per liter.
Effective February 22, oil companies implemented a price increase of P0.80 per liter for gasoline and P0.65 per liter hike for diesel, bringing the year-to-date adjustments to a total net increase of P8.75 per liter for gasoline and P10.85 per liter for diesel.