Analysts warn $100/barrel ‘new normal’
The House is expected to approve on third and final reading on Monday a measure authorizing the President to suspend or slash excise tax on fuel products during national or global economic emergencies after President Ferdinand Marcos Jr. certified the bill as urgent.
Acting Executive Secretary Ralph Recto said the President was certifying the immediate enactment of House Bill 8418, or the proposed “Act Authorizing the President of the Philippines to Suspend or Reduce the Excise Taxes on Petroleum Products During National or Global Economic Emergencies.”
The move came as the Philippines braces for potential economic fallout from the ongoing conflict in the Middle East, which has rattled global energy markets and raised concerns about continued oil price surges.
The Middle East war has caused the biggest oil supply shock in history, the International Energy Agency warned Thursday, as Iran launched a new wave of attacks against Gulf energy targets that sent prices spiking above $100 a barrel.
The IEA earlier said its members had agreed to unlock 400 million barrels of oil from their reserves – their largest release ever.
But the move was unable to overcome fears about the choking of energy supplies from the Middle East, with the Strait of Hormuz – through which a fifth of global crude passes – effectively shut down.
Two tankers in Iraqi waters were reported struck Thursday. Baghdad had already said it was cutting output because of the crisis, with Kuwait and kingpin Saudi Arabia following suit.
Also Thursday, Bahrain reported Iran had carried out an attack on fuel tanks in the country, while Saudi Arabia said it had intercepted drones headed to Shaybah oil field and drones struck fuel tanks at Oman’s Salalah port, where operations were subsequently suspended.
Brent jumped to a high of $101.59 per barrel, while WTI spiked at just short of $96. The two had rocketed as much as 30 percent Monday to a peak of nearly $120. Analysts warned $90-$100 a barrel could be the new normal for a while.
Iran said it was ready for a long war of attrition that would “destroy” the world economy, threatening any vessels from the United States or its allies.
The foreign ministers of the Association of Southeast Asian Nations, currently chaired by the Philippines, will convene a special meeting to discuss the bloc’s response as the Middle East conflict shows no signs of letup.
Foreign Affairs Spokesperson for ASEAN 2026 Dax Imperial said the ministers will hold the discussions via video conference today (March 13).
At the House, Majority Leader and Ilocos Norte Rep. Sandro Marcos, one of the authors of the measure on excise tax, said: “This bill gives the President a measured tool to cushion that shock, with clear triggers, clear limits and clear reporting when the prices of fuel and basic commodities get too high. This is a protection to the citizens from the sudden spike of the price of basic commodities.”
Under the bill, the President may exercise the authority only upon recommendation of the Development Budget Coordination Committee and in coordination with the Secretary of Energy, and only if one of two conditions is present.
The first trigger is when the Dubai crude oil price, based on the Mean of Platts Singapore, reaches or exceeds $80 per barrel for one month immediately before the order to suspend or reduce is issued.
The second trigger is when there is a declared state of national emergency or calamity and it results in extraordinary increases in domestic pump prices, as certified by the Secretary of Energy, establishing a formal basis for action beyond ordinary market movements.
The President’s suspension or reduction may be applied to specific petroleum products and may be calibrated as a full suspension or partial reduction, depending on the conditions that caused the price surge and the scope of relief needed.
To prevent abuse and to protect government revenues, the measure sets a firm duration limit of up to six months per suspension or reduction, unless Congress extends or terminates earlier through a joint resolution, and it caps the aggregate period at not more than one calendar year.
To ensure transparency, the bill requires the President, through the Secretary of Finance, to report to both chambers within 15 days from issuance of the order and every month thereafter, stating the factual basis for the action, the estimated foregone revenues and the expected effects on inflation, fuel prices and other economic activity. With AFP
Editor’s Note: This is an updated article. Originally posted with the headline: “PBBM: Fuel excise tax suspension bill now urgent”
