DOE to closely monitor US Fed meeting

MANILA, Philippines — The Department of Energy (DOE) is keeping a close watch on the US Federal Reserve’s meeting next week for a possible interest rate increase, as it would likely dictate the movement of oil prices in the coming weeks.

DOE-Oil Industry Management Bureau director Rino Abad, in an interview with Laging Handa yesterday, said the continuation of successive price rollbacks in fuel products would hinge on the Federal Reserve implementing another round of rate increase.

Abad said the US Federal Reserve has scheduled a policy rate review on July 26 to 27, and reports are indicating that it is considering the possibility of another round of interest hike.

“If this is done by the US, we believe that central banks of other countries will follow. It appears it will be a global action,” Abad said.

“If that happens, there is a big chance that we will see a continued rollback. But at this point in time, if that will not be the decision, then it appears we cannot sustain the continued rollback if there won’t be an additional round of interest hike,” he said.

Oil firms yesterday reduced diesel prices for the third straight week and gasoline prices for the second consecutive week.

Gasoline prices went down by P5 per liter, diesel by P2 per liter and kerosene by P0.70 per liter.

According to Abad, lockdowns in big countries and interest hikes being implemented globally are among the factors helping bring down demand, which help push global oil prices lower.

“Recent prevailing events point that what needs to be controlled at the moment is the demand side because it is hard to increase the supply side,” he said.

Abad said the DOE is currently coordinating with the Department of Agriculture and the Department of Transportation in computing the impact of fuel price increases in the two sectors which are currently considered as the most vulnerable.

He said the computations could be used by the government as basis in coming up with potential aid or assistance for the two sectors.

Excise tax reduction

Meanwhile, Baguio City lawmaker Mark Go has filed House Bill (HB) 1440 aiming to reduce fuel excise taxes, as pump prices continue to soar amid increases in world oil rates.

The measure seeks to roll back imposed excise taxes on fuel products such as below 91 octane gasoline from P10 to P4.35; above 91 octane gasoline from P10 to P5.35; diesel from P6 to P0; kerosene from P5 to P0 and liquified petroleum gas (LPG) from P3 to P0.

“While the erratic and volatile behavior of oil price in the world market is beyond the control of the Philippine legislature, it remains its duty to provide immediate relief to Filipinos amidst the ongoing fuel crisis. The temporary reduction of excise tax on petroleum products is a viable remedy that Congress may adopt to ease the burden on motorists and consumers,” he said.

Go explained that HB 1440 proposes to revert the excise taxes to their initial rates when average Dubai crude prices stabilize to $65 or under for four consecutive weeks.

He also filed HB 1659, seeking to amend provisions of RA 8479 or the Downstream Oil Industry Deregulation Act.

Go proposes to set a price ceiling and fix the maximum increase rate of fuel prices to prevent wide disparities in various locations, and to grant more powers to the DOE to regularly monitor fuel prices by requiring oil traders to submit verified monthly reports that justify price hikes. – Artemio Dumlao