By Myrna M. Velasco
As the country is still on a guessing game whether or not the enhanced community quarantine (ECQ) will already be eased by weekend, Filipino consumers are about to be welcomed not with impressive perks, but with massive oil price hikes at the scale of P2.00 per liter for gasoline; and P1.90 per liter for diesel.
The other essential commodity kerosene will also bear an increase of P1.25 per liter, as the new round of adjustments will be implemented at the pumps starting Tuesday (May 12).
As of press time, the oil companies that already sent notices on their price movements this week include Pilipinas Shell Petroleum, Seaoil, PetroGazz; Total, Chevron, Cleanfuel and Flying V; while the rest of the industry players are anticipated to follow.
Concomitantly, the oil companies advised that this week’s price hikes do not include yet the price escalations that shall result from the newly hiked 10-percent import duty for crude and finished petroleum products.
The industry players indicated that discussions are still ongoing with relevant government agencies – primarily with the Department of Energy, on how the duty-hinged price increases will be levied on petroleum commodities that will be sold to consumers.
On May 2, President Rodrigo Duterte issued Executive Order No. 113 which prescribes interim rise on import duty of oil commodities, so collections from it can help build up the State’s war chest against the coronavirus pandemic.
On a per liter basis, the oil companies estimated that the cost impact of the increased duty will be P1.00 to P1.50 per liter, depending on the prevailing price of a product upon the policy’s implementation.
That target in revenue beefing up is on top of the value added taxes (VAT) as well as higher excise taxes already levied to sales at the pumps because of the Tax Reform for Acceleration and Inclusion (TRAIN) Act.
The oil industry was among those heavily thumped during the coronavirus pandemic, that domestic sales alone had been reportedly down by roughly 60-percent in the last two months as ‘stay-at-home’ orders or ECQs were enforced in various parts of the country.
Given the doomed state of the oil and gas industry, an inquiry is being pushed by the Senate committee on energy to gauge the short- to medium and long-term impacts of the health crisis – not just on the downstream segment of the sector; but also on the upstream sphere of it.
It is worth noting that the Philippines was at the process of inviting fresh capital outlay for oil and gas exploration ventures prior to the intrusion of the coronavirus plague – and while investors’ response had already been anemic at that time, it is seen that the future might even be forbidding.
Senate Committee on Energy Chairman Sherwin T. Gatchalian said “the health crisis in the country has resulted in the postponement of the opening of proposals to develop potential oil and gas sources due to logistical disruptions,” and the low oil demand, he noted, may subsequently “weigh heavily on the decision to hold plans to drill and explore potential oil and gas resources.”