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Friday, July 19, 2024

National oil stockpile

“We should act swiftly and prudently.”

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For seven straight weeks, local oil prices have significantly gone up. Just as the holiday season ended, so did the much-awaited rollbacks in oil prices in the country. This new wave of successive oil price hikes coincided with the COVID-19 Omicron surge. We have moved on from the surge, but we are still seeing weekly increases of prices at the pump.

Last year, fuel price adjustments reportedly led to a total net increase of Php 17.65 per liter for gasoline and Php 14.30 for diesel. While we hope it won’t be the same this year, the rising tension between Ukraine and Russia aggravates the already tight oil supply-demand situation in the world. This volatile situation can, sadly, mean more weeks of fuel price increase, especially if it escalates further.

As a heavy importer of petroleum products, we are greatly vulnerable to global oil price increases. In times of crisis, we are constrained to implement mitigating solutions and temporary relief such as proposals to suspend excise taxes on fuel, or financial assistance to affected PUV drivers. While these measures are indeed helpful, they can only do so much. We urgently need to prepare for impending oil price hikes and potential shortage of global supply.

For now, the government should increase our current oil stockpile. The unpredictability of the situation can lead to further price hikes that will definitely hurt the economy. Meanwhile, I deem that it is time that we also seriously consider and act on long-term solutions that will ensure adequate local supply of oil at reasonable prices.

The Department of Energy issued last September 2021 a Department Circular on the proposed establishment of a Philippine Strategic Petroleum Reserve Program, with its primary implementor, the Philippine National Oil Company. This program has been long proposed after the 2019 drone attacks in Saudi Arabia, one of the world’s largest oil-producing and exporting countries. The attacks sent oil prices to record highs across the globe.

Today, the pandemic has, likewise, substantially affected oil production and world demand. We have seen how dependent many of our industries are on petroleum products—manufacturing, fishing, farming, transportation, power supply, among others—hence, the corresponding price increases on certain commodities. Many Filipinos have already expressed distress over the price increases amidst the pandemic. Meanwhile, PUV drivers and operators call for proportional fare increase to make up for the high costs of fuel and the reduced passenger capacity imposed by the government.

It is high time that we invested in our own stockpile. Having our own reserves will provide stability and security whenever there are disruptions in global oil supply and national calamities or emergencies. I, therefore, urge the national government to study and consider this DOE proposal. We can expand our existing stockpiles and establish storage facilities in different regions to optimize access. Albeit capital-intensive, this program may be implemented with the help of exporting countries to reduce the costs. However, it is important to take into account national security, geological risks and other natural hazards. Perhaps we can take Japan as a model for oil stockpiling facilities with their natural disaster prevention system. With this, a multi-agency approach to this program may be necessary.

We should act swiftly and prudently given the foreseen challenges on our oil supply. More than that, we should work together for more sustainable approaches and long-term solutions in resolving perennial and recurring problems. Many people depend on oil—fishermen, farmers, drivers, ordinary workers, and even the average Filipino. Hence, we cannot be left helpless with these price hikes.

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