‘Government must minimize impact of OPEC production cut’

Paolo Romero - The Philippine Star
�Government must minimize impact of OPEC production cut�
Sen. Imee Marcos, who chairs the Senate committee on social justice and welfare, said the Philippines and the global economy continue to feel the effect of the Russia-Ukraine conflict.
STAR / File

MANILA, Philippines — The Marcos administration should immediately take steps to minimize the inflationary impact of the surprise move of the world’s largest oil exporters to cut production that is expected to raise fuel prices, senators said yesterday.

Sen. Imee Marcos, who chairs the Senate committee on social justice and welfare, said the Philippines and the global economy continue to feel the effect of the Russia-Ukraine conflict.

She said that while oil prices are down from the peak of almost $120 per barrel from February to March 2022, translating to local pump prices of almost P90 per liter of gasoline, “the fact remains that oil prices remain high at almost P70 per liter.”

The senator cited analysts’ forecasts that the move of the Organization of the Petroleum Exporting Countries (OPEC) will increase local fuel prices by as much as P3 per liter, and possibly more.

“In the short term, the government can look at G2G (government-to-government) importation with countries like India, China and possibly Russia to avert the supply crunch,” she said.

Marcos filed Senate Bill 187 on July 7, 2022 to give the President the power to suspend the imposition of the 12 percent value added tax on petroleum products once certain trigger prices of crude are reached.

Sen. Francis Escudero has warned the expected surge in fuel prices, which would also be felt in many products and services, will “definitely affect our recovery as it will surely have inflationary effects.”

He said the Departments of Finance, Energy, Agriculture, Trade and Industry, Labor and Employment and the Bangko Sentral ng Pilipinas should undertake coordinated efforts to tame inflation.

Oil price hike

Meanwhile, fuel price hikes are expected today following a series of rollbacks in the past weeks.

In separate advisories yesterday, oil firms said they would hike gasoline prices by P1.40 per liter, diesel by P0.50 per liter and kerosene by P0.20 per liter.

The latest adjustments have ended two consecutive weeks of price cuts for gasoline and three straight for diesel and kerosene.

The price hikes take effect at 6 a.m. today for most companies, except for Caltex which implemented the adjustments at 12:01 a.m. and Cleanfuel which will implement its adjustment at 4:01 p.m.

In the coming weeks, oil prices are expected to further increase with the OPEC+ decision to cut production by 1.16 million barrels per day.

“There is an increase already. Based on a report, Brent crude has risen by around $5 per barrel today,” DOE’s Oil Industry Management Bureau director Rino Abad said yesterday.

RCBC chief economist Michael Ricafort said that prior to the surprise OPEC+ cut in oil production, global crude oil prices last week already increased, partly due to the oil production disruption amid the Iraq-Kurdistan dispute, as well as some easing of concerns over US banking turmoil.

“Right after the OPEC+ unexpected oil production cut over the weekend, global crude oil prices went up again by more than P4 or 5.5 percent overnight. Thus, local fuel pump prices could again go up by a similar extent, if the latest global crude oil prices near one-month highs are sustained for the rest of the week,” Ricafort said. – Richmond Mercurio

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