DOE sees P0.80/liter hike in oil prices with higher biodiesel blend

Published May 26, 2022, 2:41 PM

by Myrna M. Velasco

The Department of Energy (DOE) has calculated at least P0.80 per liter hike in oil prices if the coco methyl ester (CME) blend to diesel products will be increased to 5.0-percent from currently at 2.0 percent.

According to Atty. Rino Abad, director of the Oil Industry Management Bureau (OIMB-DOE), the estimated oil price hike had been one of the main factors why the National Biofuels Board (NBB) has not recommended any upward adjustment yet in the CME mix to diesel products.

“When we did our estimates around January-February this year, there would be a price difference of P0.80 per liter, and that increase will be passed on to the consuming public,” he said.

Within that timeframe, global oil prices had not surged beyond $100 per barrel yet because it was Russia’s invasion of Ukraine on February 24 this year that served as the main trigger for the swelling oil prices – hence, at current international oil prices, the department is projecting that the price increase may even escalate further.

Abad asserted that despite the projected hike in oil prices, the DOE still requested the Philippine Coconut Authority (PCA) and the Department of Agriculture (DA) to come up with a concrete policy showing that the proposed B5 blend to diesel will result in higher income for the Filipino farmers, “and that could be our offsetting strategy if we will push through with the increase in CME blend.”

He expounded “with that, the Secretary (Alfonso Cusi) is aware of the DOE position that we must step on solid ground on how we can defend that additional burden to the consuming public. And what do we require from that? It’s the benefit to the farmers.”

Abad thus narrated that “we required the DA and PCA to promulgate regulation that will ensure benefit to the coconut farmers in line with the plan to implement higher biodiesel blend.”

The DOE official further noted that the other critical requirement laid down by the NBB will be for the biodiesel producers to guarantee that there is enough feedstock for the increased CME use of the petroleum sector.

“We should have a regulation on the feedstock because we don’t want to repeat our mistake with what happened to ethanol (as a blend to gasoline products) – that while we increased the blend to 10-percent, in reality, 5.0-percent of the required volumes are being imported, so we don’t want that to happen again,” Abad stressed.

The energy official emphasized that without those two contentious policy concerns sorted out, the DOE-led NBB will not make any recommendation yet for the targeted B5 blend to diesel.

Abad nevertheless stated that the energy department had already firmed up the Philippine National Standard (PNS) for higher CME mix to diesel –and the product standards promulgated had been anchored on B3, B4 and B5 blends.

“As far as DOE is concerned, the PNS is now ready. We are just waiting now for the required policies or regulations from the PCA, so we can recommend to the Secretary and we will have a basis that there’s specific policy that will ensure benefit for the farmers,” the energy official has reiterated.