By Myrna Velasco and Mario Casayuran
With the big-time price hikes, the Department of Energy (DOE) summoned oil companies for an “emergency meeting” on Tuesday to explore contingency measures that will cushion the impact of rising pump prices on consumers.
Energy Assistant Secretary Leonido J. Pulido III said the meeting of the DOE with representatives of major oil companies was still ongoing as of press time.
With prospects that global oil prices will likely swell to US$100 per barrel next year, Pulido said one of the points of discussion was on how to cushion the impact of soaring oil prices on consumers.
On the part of the DOE, he said they were scheduled to lodge a request with the Joint Congressional Power Commission (JCPC) for an amendment of the provision of the Tax Reform for Acceleration and Inclusion Act 1 (TRAIN-1), setting the US$80 per barrel as trigger point for the suspension of the excise taxes for petroleum products.
Under the provisions of TRAIN-1, the collection of two-percent excise tax on fuel may be suspended if the world price of crude hits US$80 per barrel or more for three consecutive months.
But given the financial crunch that high oil prices had been causing on consumers, the DOE has been laying the argument to tweak the law.
Pulido emphasized that without amending the law, “we will need to wait three months to suspend the excise tax.”
The JCPC is an oversight congressional body co-chaired by Senate Committee on Energy Chairman Sherwin T. Gatchalian and House Committee on Energy Chairman Lord Allan Jay Velasco.
But Gatchalian said the suspension of the collection of the two-percent excise tax on fuel starting January to tame inflation should only be the last resort.
He senator said the suspension option should only be exercised if mitigating measures are not in place.
“We’ll file a resolution to hear the revised inflation targets and how it will affect the budget and also the policies next year, in particular, the second round of TRAIN 1 because there are increases in taxes that require study,” he said.
But opposition Sen. Paolo Benigno Aquino IV pressed for the suspension in the collection of the additional excise tax on petroleum products scheduled for January, 2019, under the TRAIN 1
“If the world price of crude oil hits $80 per barrel or more for three successive months, the collection of excise tax on fuel scheduled in January should be suspended,” Aquino said.
Aquino also expressed alarm over the statements by Budget Secretary Benjamin Diokno downplaying the effects of inflation on high prices of goods, especially food.
Gov’t may lose P49.4 B
National Economic and Development Authority (NEDA) Secretary Ernesto M. Pernia, who was at the Senate to defend his office proposed 1.44 billion budget for 2019, said he would convey to his fellow economic managers the calls for the suspension of the excise tax on oil and sit down to decide.
“It has to be a collegial decision,” Pernia told Senator Loren Legarda, chairperson of the Senate Committee on Finance that heard Pernia’s team defend their budget.
But Pernia said that should the excise tax on oil be suspended, the government stands to lose P49.4 billion in revenues.
Oil prices held around four-year highs Tuesday after another blistering rally, supporting energy firms, but most markets were in retreat as traders brushed off a positive lead from Wall Street and the US-Mexico-Canada trade deal.
Crude has motored in recent weeks on concerns about supplies after sanctions are imposed on Iran next month, while OPEC’s decision not to ramp up output, upheaval in Venezuela, a strong dollar and a drop in oil rigs have also pushed prices higher.
Both main contracts jumped almost three percent Monday and now some observers and key players in the sector are eyeing $100 a barrel.
But Malacañang is hopeful that world oil prices would not further increase, but is prepared with a contingency plan to temper the soaring cost.
Presidential Spokesman Harry Roque said the tax reform law allows the government to suspend the next increase in fuel excise tax rate when the price of Dubai crude oil reaches a certain level.
Roque issued the statement after local oil companies implemented another round of price increase amid continued rise in global prices.
“It’s in the law. When it reaches a certain amount, no one has to do anything. It is automatically suspended. So we hope it will not reach that level,” Roque said in a Palace news conference last Monday. (With a report from Genalyn D. Kabiling)