Industry executive tells Senate: Expect no relief from soaring prices
Pump prices will continue to go up and continue to hover at an average of P80 to P90 per liter until year-end, an oil firm official said Tuesday.
“Before, the movement of diesel prices was only by centavos, but now [it is] often by more than P1 per liter. The sad thing is I see it continuing until the end of this year,” Cleanfuel president Jesus Suntay said during Tuesday’s Senate committee on energy hearing.
Suntay said there are no indications of world oil prices going down. Oil supply would continue to be available—but at a specific price, he added.
“OPEC refused to increase production, and a big portion supplied by OPEC goes to the EU, which Russia used to supply as much as 80 percent. But because of the embargo (against Russia), OPEC now supplies them (EU), and supply to Asia is affected,” he said.
Suntay said many oil-producing countries suffered during the pandemic and are now trying to recover losses.
“While they said they would increase production, they didn’t do it. We see oil prices hovering between P80 and P90. The problem is it’s the start of the travel season in the US, so demand will increase,” he said.
He said China’s easing restrictions and talk of greater demand continue to drive up prices.
Suntay said the Department of Energy (DOE) had asked the fuel sector to subsidize fuel costs for public utility vehicles (PUVs), but he said this could not go forever.
“They can be given subsidies if many private cars fuel up. But becauseof the price increase, there are fewer and fewer private cars being used, and they are now managing their consumption. So, the subsidy for PUVs will be affected,” he said.
The Metropolitan Manila Development Authority (MMDA) on Tuesday said vehicular traffic along the main EDSA thoroughfare has decreased this month, in part because of high fuel costs.
MMDA chairman Romando Artes said the number of vehicles that passed through EDSA on May 5 reached 417,000–above the pre-pandemic vehicular traffic of 405,000. But a count on June 9 showed only 392,000 vehicles on EDSA.
“There was a total deficit of 27,000 from before the elections and we think a big factor here is the continued rise in the prices of fuel,” he said in Filipino.
Oil companies raised pump prices across all products for the third consecutive week by as much as P3.10 per liter for diesel and P0.80 for gasoline on Tuesday.
The latest data available from the DOE indicate that the year-to-date adjustments stand at a net increase of P28.70 per liter for gasoline, P41.15 per liter of diesel, and P37.95 per liter for kerosene since the start of the year.
The peso’s depreciation, meanwhile, means that imported oil will cost more in the local currency.
The peso tumbled Tuesday to a new 44-month low of 54.265 against the US dollar in line with regional currencies’ weakness following the interest rate hike by the US Federal Reserve.
The peso traded weaker than its Monday’s closing of 54.065 against the green back. It was the local unit’s weakest level since it settled at 54.32 a dollar on Oct. 4, 2018.
Senator Grace Poe said she was ready to refile a bill seeking a temporary halt to the collection of excise taxes on oil products to cushion the blow of the surging cost of fuel.
Poe’s bill proposes to amend Section 148 of the National Internal Revenue Code to provide for the automatic suspension of the excise tax on regular gasoline, unleaded premium gasoline and diesel when the average Dubai crude oil based on Mean of Platts Singapore for three months prior to the scheduled increase of the month reaches or exceeds $80 per barrel.
Poe said suspending oil excise taxes will bring instant relief to the public as it will lower the prices of fuel products, reducing the cost of goods and services.
“To our people in daily survival mode, the oil tax reprieve will provide a crucial lifeline,” Poe said.
“The revenues the government will generate from the excise tax to fund cash aid might come too late for families who have nothing to eat now,” Poe said
Under the Tax Reform for Acceleration and Inclusion (TRAIN) law, the excise tax on regular and unleaded premium gasoline is currently set at P10 per liter of volume capacity. The excise tax on diesel is pegged at P6 per liter.
A value-added tax of 12 percent is also imposed on the sale of gasoline and diesel.
The suspension of the excise tax will immediately bring down costs by P10 per liter for gasoline and P6 per liter for diesel.
The authority granted under the TRAIN law to suspend the collection of excise tax was transitory and covered only the years 2018 to 2020.
“If the government is willing to spend billions in cash assistance to targeted beneficiaries, then it should also be ready to forego a portion of its revenues during the most critical times in order to save millions of lives,” Poe said.
“We hope that this call on excise tax suspension, which is becoming louder by the day, will merit serious consideration from the incoming administration,” the senator said.
President-elect Ferdinand Marcos Jr. has said he prefers to provide aid to the sectors affected by the continuing increase in fuel prices instead of suspending the excise tax on oil.
Marcos said decreasing the excise tax on oil products does not help those affected by the soaring prices.
He said those who are directly affected, especially the transport sector, should be given priority.