By Myrna Velasco
As an aftermath of the drone-induced attack in Saudi Aramco facilities last weekend, prices of gasoline products are expected to soar by P2.40 to P2.40 per liter at the domestic pumps next week.
(REUTERS / FILE PHOTO / MANILA BULLETIN)
The prices of diesel will also climb by P1.80 to P1.90 per liter, while kerosene prices will rise by P1.70 to P1.80 per liter, based on the estimates of the oil firms from the outcome of four-day trading in the world market.
Price adjustments may still change a little depending on how global oil trading will turn out by Friday (September 20), the industry players have indicated.
After surging to an all-time high price level of close to $67.55 per barrel in the early trading days last week, Dubai crude -- which is the benchmark for Asian oil refiners -- had softened to $62 per barrel at end-week trading.
The Department of Energy (DOE) previously estimated price hikes of P3 to P5 per liter, but since the anticipated increases already softened relatively, the government may no longer exercise “moral suasion” on enforcement of staggered price adjustments.
Given the recent geopolitical incident in the Middle East, the Senate Committee on Energy is urging the DOE to draw up short- to long-term mitigating measures that the country can lean on amid oil price shocks that may be triggered by events akin to the drone strike on the facilities of giant oil producer Saudi Aramco.
In a resolution filed by Senate Committee on Energy Chairman Sherwin T. Gatchalian, he is seeking an inquiry this Monday (September 23) into the short, medium and long-term plans of the DOE “to mitigate the adverse repercussions of supply shocks on Philippine oil supply and prices.”
READ MORE: DOE ‘mitigating measures’ urged amid oil price shocks
Gatchalian opined that “this attack on Saudi Aramco and the brewing conflict in the region raises concerns on the availability of supply and its effect on oil prices in the Philippines, specifically in the transportation and power generation sectors.”
As fleshed out, 68-percent of petroleum consumption in the country is attributable to the transport sector; 11-percent for commercial use; 5.0-percent for power generation; 5.0-percent for manufacturing and 11-percent for other industries such as those in agriculture, mining, and construction.
The lawmaker similarly indicated that such adverse incidents could portend very far-reaching implications on the country’s energy security agenda.
Gatchalian, thus, advised the DOE that it must at least be proactive in apprising the public of the consequences of certain events that could affect not just their pockets or paychecks, but other facets of their daily lives, as well as the Philippine economy in general.
Primarily, he noted that consumers must be kept abreast of the expected impact of the Saudi Aramco attack on oil prices and supply.
He also said the DOE must lay down its short and medium-term plans and strategies to ensure continuous and sufficient supply, then come up with long-term plans “in order to prevent vulnerability to price shocks and insulate consumers from unexpected shortages and sharp price increases.”
In a related development, the Paris-based International Energy Agency (IEA) indicated that based on its ‘regular contact’ with Saudi Energy Minister Abdulaziz bin Salman, the oil kingdom has been reiterating its commitment “to ensure that global oil markets remain well supplied,” with ample stocks that market can also draw on in case of shortfalls.
Nevertheless, IEA Executive Director Faith Birol noted the “recent events are a reminder that oil security cannot be taken for granted, even at times when markets are well supplied, and that energy security remains an indispensable pillar of the global economy,” with him adding this is the reason why the IEA is always vigilant “about the risk of disruptions to global oil supplies – whether they are caused by extreme weather events such as hurricanes, major technical outages or geopolitical crisis.”
Among the IEA-member countries, it emphasized that they hold about 1.55 billion barrels of “emergency stocks” in government-controlled agencies – which could redound of 15 days of total world oil demand.
“These can be drawn upon in an emergency collective action and would be more than enough to offset any significant disruption in supplies for an extended period of time,” the global energy think tank said.
Further, the IEA-member countries also has 2.9 billion barrels of industry stocks as of end-July, which is actually on a two-year high and this can cover for more than a month of world oil demand.
“These stocks include about 650 million barrels of obligated emergency stocks – which can be made immediately available to the market when governments lower their holding requirements,” it stressed.