The Department of Energy is planning a cost subsidy to public transport sector to cushion impact on the most vulnerable as oil prices surged past $81 per barrel this week.
Atty. Rino Abad, director of the DOE- Oil Industry Management Bureau (OIMB),said the government is currently exploring the possibility of offering subsidies to critical sectors, primarily for the public transport group.
“The LTFRB (Land Transportation Franchising and Regulatory Board) has recently assisted this sector via Pantawid Pasada Program under the TRAIN (Tax Reform for Acceleration and Inclusion) Law, then special cash assistance were given under the ‘Bayanihan to Heal as One’ Act,” he explained.
The DOE official, nevertheless, qualified that “cash assistance will have to be discussed with Congress for allocation of budget.”
Meantime, Energy Secretary Alfonso G. Cusi has called on Philippine oil companies to guarantee that the domestic market will be sufficiently supplied with petroleum commodities; and ‘price hike cushion’ will be extended to financially-vulnerable sectors.
The energy chief primarily reminded oil industry players on the mandated level of inventory that they must comply with – and that would be 15 days for importers of finished oil products; and a 30-day buffer of combined crude and refined petroleum products for refiner Petron Corporation, as underpinned by a Department of Energy (DOE) Circular issued in 2003.
In the case of liquefied petroleum gas (LPG), a basic cooking fuel for households and businesses, the required minimum inventory is for seven days.
“The DOE will continue to closely monitor global oil supply and price movements,” with him noting that “we are working with the downstream oil industry players to ensure all mechanisms to protect our consumers against the impact of such developments as much as possible,” said Cusi.
The October 4 meeting of the Organization of the Petroleum Exporting Countries and its ally-producers (OPEC+) added jitters to the supply-strained international market, that’s because the committed output increase had just been at a modest 400,000 barrels per day starting in November.
Tight supply of oil in the world market has caused the price swells distressing consumers’ pockets for several weeks already. The upswing is not seen abating in the coming weeks or months.
With these developments in the global oil market, Cusi reiterated his directive on the oil companies “to ensure adequate supply, and come up with plans to mitigate possible price hikes of oil products in the coming months.”
The DOE further apprised the industry players that under Executive Order No. 134, “all oil companies and bulk suppliers operating in the country, shall maintain a minimum inventory of petroleum stock in the amount sufficient to ensure a continuous, adequate and stable supply of petroleum products.”
EO 134 is anchored on domestic and international events, “such as but not limited to terrorist attacks, armed conflicts in the Middle East and in other regions whence the Philippines draws or secures its petroleum supply, threaten or restrict the supply of petroleum to the Philippines.”
The persistent rally in global oil prices, however, is not so much rooted on geopolitical events such as terrorist threats or attacks, but more on increasing demand gobbling up available supply because of the economic rebound in many countries coming out from the Covid-19 pandemic.