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Manila Bulletin devider Business devider Up to P3/liter oil price hike seen next week

Up to P3/liter oil price hike seen next week

Published Mar 3, 2022 02:29 pm

As global oil prices skyrocketed to $116 per barrel because of the escalating Ukraine-Russia war, Filipino consumers will need to brace for punishing price hikes of P2.00 to P3.00 per liter at petroleum pumps next week.

Despite the astronomical spikes in domestic oil prices though, the Department of Energy (DOE) is not very keen on asking oil companies to stagger price hike implementations on fears that the adjustments may just further pile up in the weeks ahead.

Energy Undersecretary Gerardo Erguiza Jr. noted that the department has yet to solicit the suggestion of its Oil Industry Management Bureau (OIMB) on what are the best steps to be taken when it comes to the anticipated hefty oil price hikes by Tuesday, March 8.

Based on industry calculations, every $5 increase in global oil prices could result in roughly P1.80 per liter adjustment in gasoline prices at the domestic pumps, P2.20 to P2.30 per liter for diesel, and up to P3.00 per liter for kerosene products.

Since prices had soared to record $105 per barrel during the February 24 Russian invasion of Ukraine, international oil prices surged even higher this week by more than $10 per barrel, reaching a high of $115 to $116 per barrel in the past two days.

Global industry experts indicated that prices in the world market have been on astronomical rise because of fears that Russian oil’s flow would be disrupted, especially if its war with Ukraine drags on.

Apart from the radical spikes in international prices, the Philippine oil market is also saddled with sliding value of the Philippine peso versus the US dollar that will affect pump price adjustments because foreign exchange rate is among the factors impacting oil prices.

On account of the escalating prices in the world market, Senate Committee on Energy Chairman Sherwin T. Gatchalian sounded off that he is “open to reviewing the Oil Deregulation Law to improve transparency among industry players and assess the benefits to our consumers.”

He stated that since Republic Act 8479 or the Downstream Oil Industry Deregulation Act of 1998 is now 24 years old, “the review can be helpful in optimizing the oil industry” albeit he has been very cautious in mentioning the policy modifications he will be advocating for.

Gatchalian acknowledged though that “a fundamental problem on why we are experiencing high prices of oil is because of our over dependence on imported oil.” With that, prices at domestic pumps are also extremely vulnerable to swing of prices in the world market.

He reiterated “we import almost 100% of our oil requirements. As long as we import oil, we will be susceptible to global oil shocks that we have absolutely no control of.”

The lawmaker’s proposal is for the country to step up on its energy security agenda – and that can be done through the exploration of new oil and gas indigenous resources; and for the power sector to transition into renewable energy as well as electric vehicles in the medium- to long-term.

Related Tags

#OIL #PRICEHIKES #RUSSIA-UKRAINEWAR #SUPPLYDISRUPTION #FOREX #DOE
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