Fuel price drop next week seen as temporary

TOWER OF TIME | Instructors are offering free bike lessons on car-free Emerald Avenue in Pasig City on Saturday, March 19, 2022. The government has encouraged commuters to consider using bikes to work to save on fuel costs. (NIÑO JESUS ​​ORBETA/Philippine Daily Inquirer)

MANILA, Philippines – The sharp decline in local fuel prices expected next week may not be sustainable as the International Energy Agency (IEA) has warned that global oil supply will suffer a major reduction once Russian oil stops reaching the market due to sanctions related to its invasion of Ukraine.

For the first time this year, motorists can expect a rollback, and a heavy one too, with diesel down to P11.70 and petrol down to P6.25 per litre, based on calculations from local oil companies on Saturday. Kerosene, mainly used as cooking fuel, could drop an average of 8.75 pesos per litre.

The pullback, almost equivalent to the same price increase last week, is expected to take effect on Tuesday.

These rates are based on last week’s global market trading and weekly price adjustments in the deregulated downstream oil sector.

Other factors that affect prices at the pump are oil import premiums, exchange rate fluctuations, and biofuel components added to diesel and gasoline.

Terrible showing

The IEA on Friday predicted an oil supply crisis of 3 million barrels per day of Russian oil.

Hopes that talks between Russia and Ukraine would yield a positive deal quickly evaporated last week, sending oil prices back above $100 a barrel.

The IEA is an autonomous intergovernmental organization and serves as a source of information on the oil market and other energy sectors, which helps countries respond to disruptions in the global oil supply.

He offered a 10-point plan to ease the expected supply strain and reduce the high prices of petroleum products.

The plan includes “car-free Sundays in the cities”, working from home up to three days a week, avoiding air travel and adopting an energy-efficient lifestyle.

He noted that “immediate actions in advanced economies can reduce oil demand by 2.7 million barrels per day over the next four months.”

An initiative to help public transport in the country was launched last week with the release of 569 million pesos in fuel subsidies to drivers of public utility vehicles (PUVs) from the Land Bank of the Philippines, owned by the ‘State.

Landbank said on Saturday that the amount was credited to holders of “Pantawid Pasada” payment cards in mid-March. It benefited 87,500 jeepney drivers with 6,500 pesos each last week, the public bank said.

Beneficiaries without payment cards can obtain them at Landbank branches identified by the Land Transportation Franchising and Regulatory Board (LTFRB). Cards must be used to purchase fuel at participating gas stations nationwide.

The fuel subsidy total of 2.5 billion pesos will be distributed to 377,000 PUV drivers. Another 2.5 billion pesos will be released in April.

The government had budgeted a separate 1.1 billion pesos in fuel rebates for farmers and fishermen.

Excise on fuel stays

Cash assistance of 2,400 pesos per year to each poor Filipino household would require a total of 33.1 billion pesos, which the government could raise from excess value-added tax (VAT) levied on petroleum products, according to the finance managers.

Part of this amount could come from an additional 26 billion pesos in oil duties that are expected to be collected by the Customs Office this year.

President Duterte’s economic officials had rejected calls to suspend excise duty on petroleum products as part of the Tax Reform for Acceleration and Inclusion (TRAIN) Act because the government would lose 105.9 billion pesos in revenue this year.

The government had scheduled the collection of a total of 147.1 billion pesos in taxes on petroleum products in 2022, 15.8 billion pesos in VAT according to the previous benchmark estimate of world oil costing 70 dollars per barrel, plus a fuel excise of 131.4 billion pesos. .

Jeepney drivers and operators said they were disappointed and frustrated by the LTFRB’s decision on Friday to reject their request for an interim P1 fare increase.

Orlando Marquez, president of Liga ng Transportasyon at Operators sa Pilipinas, said when diesel prices fell in 2018, groups representing drivers and jeepney operators voluntarily reduced the minimum P1 fare.

“We just want them to bring back the minimum P10 fare, given the circumstances. It would have helped an ordinary driver buy at least 2 kilograms of rice. Yet they can’t even give that away? he said in an interview with the Inquirer.

More direct help

Ricardo Rebaño, president of the Federation of Jeepney Operators and Drivers Association of the Philippines, said raising fares would have been the most direct form of help for jeepney drivers, as obtaining the grant of 6,500 pesos was inconvenient.

One of the reasons was that some operators were unavailable or uncooperative, meaning drivers from those operators cannot claim the subsidy, he said.

Also, he said, if the jeepney had just been sold to another operator, the old operator remains the fuel subsidy recipient on paper, not the new operator.

“We are sad and I told my members that they can quit their job as drivers and look for another one just so they can still have food on their table,” Rebaño said. “I just hope the transport officials we have see the current state on the ground, so they can see firsthand the situation of our transport workers.”



Big drop in fuel prices next week, if the trend continues

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