Government urged to prepare for looming oil price hike

MANILA, Philippines — The government should prepare for a potential increase in domestic oil prices following a recent cut in global output by oil producers, Sen. Sherwin Gatchalian said yesterday.

Gatchalian, vice chairman of the Senate committee on energy, said in a statement that the Department of Energy (DOE) should immediately coordinate with industry players to ensure a sufficient and steady supply of energy in the country after Saudi Arabia and other OPEC+ oil producers announced further cuts to oil output by 1.16 million barrels per day.

“This event is unfortunate, and the government should immediately take actions that would cushion the impact of a possible effect on the domestic economy, particularly since this would further intensify inflationary pressures,” he said.

Gatchalian urged the DOE to expedite the implementation of the Electric Vehicle Industry Development Act (EVIDA) to usher in a more widespread use of electric vehicles to ease the country’s dependence on imported oil in the long run.

He also called on the Land Transportation Regulatory and Franchising Board (LTFRB) to initiate preparations for an efficient and timely implementation of the Pantawid Pasada program.

Gatchalian earlier filed Senate Bill 384, which seeks to institutionalize the Pantawid Pasada program given the need to set up an energy subsidy program to safeguard the public transport sector against oil price shocks.

“We all know that any disruption in the supply of oil would result to higher prices. That is why the government should act fast in addressing the challenges so that the sectors most affected will have immediate protection,” he said.

Too early to say

Meanwhile, Finance chief Benjamin Diokno maintained that it is too early to say whether domestic inflation will once again suffer the brunt of global oil producers’ decision to reduce output.

“It’s too early to say what would be the impact of that. I think OPEC is kind of anticipating that if they don’t do anything, prices of oil will go lower than what it is right now,” Diokno said. “There are many moving parts so we don’t know yet what will be the impact. Because if you look at the forecast for oil, it’s really going down.”

OPEC, particularly Saudi Arabia, Kuwait and Oman, recently cut oil output by one million barrels per day. Members of OPEC account for roughly 40 percent of global crude oil production.

“Who knows there could be some additional output coming from the US. Some are forecasting a global slowdown, so the demand for oil could also slow down,” Diokno said.

For his part, RCBC chief economist Michael Ricafort said global crude oil prices were already rising last week prior to the surprise OPEC+ cut.

He said the increase was partly due to the oil production disruption amid the dispute between Iraq-Kurdistan, as well concerns on US banking turmoil after First Citizens Bank purchased SVB last week.

As a result of the movements in the international oil market, local oil firms yesterday hiked gasoline prices by P1.40 per liter, diesel by P0.50 per liter and kerosene by P0.20 per liter. – Paolo Romero, Louise Maureen Simeon