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Wednesday, December 6, 2023

DOE: Another rollback seen next week, but oil prices remain volatile

The Department of Energy (DOE) warned that world oil prices may continue to be volatile despite forecasts of a possible rollback in the domestic market due to the movement of global prices early this week.

“You know that it is volatile and we have to always be ready. Because we are already moving towards the winter months and normally, the prices will increase. But let us hope that the external factors like Ukraine and Russia will stabilize,” Energy Secretary Raphael Lotilla said.

He said world oil prices normally go up during the winter months due to the higher demand for heating.

“Prices may go up and down so we have to manage expectations that it will continue to go down because there are a lot of external factors involved,” the energy chief said.

“So we must continue to save on unnecessary trips outside of the house, let us use mass transport systems so we can save on these expenses,” he said.

Sources said it was too early to project what prices would look like, given that the weekly computation takes into account five days of movement in world oil prices.

But based on the first two days of trading, prices for gasoline could be cut by P1.80 to P2 per liter, diesel, by 30 to 50 centavos per liter, and kerosene by P1 to P1.10 per liter.

Meanwhile, Lotilla said he would leave it to Congress to follow up on their appeal for oil companies to absorb part of the anticipated increase in oil prices.

He said the Philippine Competition Commission (PCC) has been conducting studies in the oil industry.

“They are in the better position than DOE to look at anti-competitive behavior. It is something worthwhile looking to, as for political appeal (to cut profits), it is also something useful,” Lotilla said.

DOE director for oil industry management bureau Rino Abad said early this week that they will watch closely what happens after the Russian government announced it will temporarily limit oil exports to avoid shortages in the domestic market.

“It appears this will have an effect of a restriction in supply so by implication there will be pressure for prices to increase so we have to monitor the next few days if there will be an actual increase,” Abad said.

The average price for gasoline in the National Capital Region currently ranges from P62.35 to P90.15 per liter, diesel from P62.95 to P87.10 per liter and kerosene from P80.75 per liter to P93.09 per liter.

On Sept. 26, the oil firms cut pump prices by P0.50 per liter for kerosene and by P0.20 per liter for gasoline and diesel to reflect the movement of prices in the world oil market.

This was driven largely by the US Federal Reserve’s warning of more price hikes although this was tempered by expectations of tight supply until the end of the year.

The latest price rollback resulted in a year-to-date net increase of P17.30 per liter for gasoline, P13.40 per liter for diesel and P9.44 per liter for kerosene.

House Deputy Majority Leader Erwin Tulfo on Wednesday said House leaders are asking oil companies to give discounts of up to P4 per liter on fuel and to expand this scheme to cover private motorists.

At a meeting with House leaders Tuesday, oil company representatives offered to give discounts of P1 to P2 per liter for public utility vehicle drivers as a way to cushion the blow of costly fuel prices.

Pump prices have been going up for 11 consecutive weeks up to last week, followed by a slight rollback this week.

But Tulfo said discounts of P1 to P2 per liter may not be enough, since such discounts were given back when gasoline and diesel were at P50 per liter.

Tulfo said the lawmakers are appealing to the big three companies to “either double or add a peso or two to these discounts on gasoline and diesel.” He said this would be a big help.

The Makabayan bloc in the House, meanwhile, slammed the proposed P500 million reduction in the allocation for public utility vehicles’ fuel subsidy in the 2024 national government budget.

In sponsoring the Department of Transportation budget, Valenzuela City Rep. Eric Martinez, said on Tuesday that the agency requested P5 billion to fund fuel subsidies next year.

However, the Department of Budget and Management granted only P2.5 billion, citing “limited fiscal space.” This figure is lower than this year’s P3 billion budget for the program.

“The cut in fuel subsidy is unacceptable. While there are such cuts, government economic managers are opposed to the suspension or removal of VAT and excise tax on petroleum products,” Kabataan Rep. Raoul Manuel said in a mix of Filipino and English

He said now is the time to give direct subsidies to the transport sector, not to cut back on them.

The government’s PUV modernization program, meanwhile, received zero allocation in the proposed 2024 budget.

Martinez said the DOTr requested P1.8 billion funding for the program, including P1.2 billion for equity subsidies, but this was not approved by the Department of Budget and Management.

The House of Representatives terminated Tuesday night the plenary debates on the proposed 2024 budget for the DOTr and its attached agencies.

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