By Sheldeen Joy Talaveraand Chloe Mari A. Hufana, Journalists
OIL COMPANIES have consented to enact the pump price increase in two stages this week to alleviate the pressure on consumers, the Department of Energy (DoE) stated on Monday.
Seaoil Philippines, Shell Pilipinas Corp., Petron Corp., Caltex Philippines, PetroGazz Ventures Philippines Corp., Unioil Petroleum Phils., Inc., Jetti Petroleum Inc., and Cleanfuel announced they will boost gasoline prices by P1.75 per liter, diesel by P2.60 per liter, and kerosene by P2.40 per liter, effective June 24.
A subsequent round of price increases will be carried out either on June 26 or June 27.
Seaoil, Shell, Caltex, and Petron mentioned they will hike gasoline prices by P1.75 per liter, diesel by P2.60 per liter, and kerosene by P2.40 per liter on June 26. Jetti and PetroGazz will raise pump prices by the same amount on June 27.
The DoE on Monday indicated it convened with representatives from the downstream oil sector who agreed to a staggered implementation of the significant price increase this week.
“Our discussions with industry stakeholders today reflect our mutual commitment to reconcile economic realities with the necessity to protect our populace from abrupt price changes, and we are glad to share they have positively responded to our appeal,” DoE Officer-in-Charge Sharon S. Garin mentioned in a statement.
Present during the DoE meeting were delegates from Petron, Shell Pilipinas, Caltex, Jetti Petroleum, PetroGazz, Phoenix Petroleum, PTT Philippines, Seaoil, Total, Unioil Petroleum Philippines, Filpride, and Cleanfuel.
The DoE previously calculated that diesel prices would increase by P4.30-P4.80 per liter; and gasoline by P2.50-P3 per liter this week.
Global crude oil prices have surged amidst the intensifying conflict in the Middle East. Following the US striking several nuclear sites in Iran, the latter’s parliament is now contemplating the closure of the Strait of Hormuz, a waterway between Iran and Oman through which approximately 20% of the world’s oil transits, according to Reuters.
Energy Undersecretary Alessandro O. Sales stated that the recent fluctuations in oil prices are predominantly due to speculative trading in the context of geopolitical insecurity and not due to actual supply interruptions.
“We are diligently observing global oil price benchmarks and foreign exchange trends, but we also encourage them to act cautiously when transferring cost changes to consumers,” he added.
“Much of the recent price fluctuation is being driven not by actual supply disruptions but by speculative trading stemming from geopolitical uncertainties,” he continued.
The DoE asserted it is implementing measures “to ensure sufficient domestic fuel supply, including adherence to mandatory inventory requirements for oil firms.”
Under current regulations, oil firms are mandated to maintain a 30-day inventory of fuel.
Simultaneously, Ms. Garin also called upon oil companies to increase the number of their retail outlets providing fuel discounts to the transportation sector.
ECONOMIC TEAM MEETING
Meanwhile, President Ferdinand R. Marcos, Jr. summoned a meeting with his economic team to deliberate on contingency plans amid concerns that the potential closure of the Strait of Hormuz will disrupt global supply, as stated by Malacañang.
Palace Press Officer Clarissa A. Castro declined to provide additional details about the meeting but mentioned that the government is preparing to initiate a fuel subsidy for public utility vehicle drivers. The government has earmarked P2.5 billion for this program.
If global crude prices surpass the $80-per-barrel mark, fuel subsidies for public transportation drivers and fishermen will be automatically activated.
“It will create a domino effect because even if we state that our drivers will receive a fuel subsidy, it is unavoidable that it will also be felt in logistics [and] trading,” Ms. Castro remarked in Filipino.
Concurrently, Ms. Garin is scheduled to meet with officials from the Transportation and Agriculture departments on Tuesday to discuss the timely rollout of targeted subsidies for public transport drivers and farmers.
As of June 23, the average price of Dubai crude oil is recorded at $75.16 per barrel.
According to Ms. Castro, Mr. Marcos assured Filipinos that the government is making every effort to mitigate the effects of the impending oil crisis.
“We are prepared for any developments, and the government will address the needs of the citizens, and they need not worry because the government is currently working for all of us,” she stated in Filipino.
OVERDEPENDENCE ON IMPORTS
Amid the rising conflict in the Middle East, the government should prioritize strategies to decrease reliance on imported oil by enhancing local upstream exploration, according to Edgar Benedict C. Cutiongco, president of the Philippine Petroleum Association.
Mr. Cutiongco informed BusinessWorld that there is a necessity to boost incentives and support the DoE’s efforts to attract investments in oil and gas exploration and production, including “attractive fiscal terms and a stable regulatory framework.”
“To enhance the overall environment, incentives are being reassessed beyond their current focus on the upstream oil sector,” he stated. “While the downstream sector inherently benefits from a stable supply of domestic fuel, further improvements include optimizing the one-stop shop for permitting and transitioning from net oil sharing to gross production sharing incentives.”
He added that the government should “prioritize and hasten exploration within well-defined Philippine jurisdiction while closely monitoring developments in the West Philippine Sea.”
The upstream segment of the oil and gas sector concentrates on exploration, drilling, and extraction of crude oil and natural gas.
The Philippines imported 3,476 million liters of crude oil during the first half of 2023, reflecting a 23.7% increase from 2022, as reported by the DoE.
Simultaneously, IBON Foundation Executive Director Jose Enrique “Sonny” A. Africa noted that the Philippines has limited flexibility as it remains reliant on imported fuel.
“These factors make us highly economically vulnerable to any escalation in the Israel-Iran conflict,” he remarked in a Viber chat.
Any rise in oil prices will exacerbate inflation and widen inequality, according to Mr. Africa.
“Rice prices, for example, are susceptible to the impacts of oil prices on diesel fuel, transportation, fertilizers, and other production expenses,” he added. “The government should recognize that it is long overdue to reduce dependence on volatile international markets and foster a more resilient domestic economy with enhanced food and energy self-sufficiency.”