DOE: Brace for more pump price increases

Consumers should brace for continued fuel price increases as the escalation of the Russia-Ukraine conflict is putting further pressure on global oil supply, the Department of Energy (DOE) said yesterday.

Compounding the problem is the production cut by the Organization of Petroleum Exporting Countries and its allies (OPEC+), it added.

“In view of the above, the sentiment of the market knowing there is insufficient daily production and

the supplement is already coming from the existing stored inventory and the ongoing uncertainty of the effect of Russia conflict, the price is already experiencing premiums,” Rino Abad, director of the DOE-Oil Industry Management Bureau, said.

The DOH also cited reports from Bloomberg and CNBC, which point to a possible uptick in Brent crude price from $90 to $120 in the coming days.

“If this projected increase actually happens then its impact will be to increase our domestic pump price,” the DOE said.

In terms of supply, the country will not experience any disruption since it does not directly import oil from Russia and Ukraine.

“There is limited impact on actual supply disruption due to sanction to Russia or actual conflict with Ukraine,” the DOE said.

On the downside, sources of finished products import a portion of their crude requirements directly from Russia.

“We import finished products from China, South Korea and Japan and these countries are the ones importing crude oil from Russia, which indirectly exposed our finished product import,” the DOE said.

China gets around 15 percent of its crude imports from Russia, while South Korea gets six percent and Japan, two percent.

“There is already high price speculation coming from the uncertainty of Russia sanction not necessarily on oil supply but indirectly on the monetary ability of Russia to continue accessing the global financial system which will ultimately affect the export-import negotiations with Russia,” a DOE report said.

In a text message, Laban Konsyumer Inc. president Victorio Dimagiba said the government should come out with concrete and immediate actions in the light of the anticipated further increases in fuel prices.

“Government should get out of hiding in their airconditioned rooms and give out financial assistance to consumers which are long overdue. Or they may be sued for gross negligence as public officials,” he said.

Hands tied

In a radio interview yesterday, DOE Undersecretary Gerardo Erguiza said their hands are tied because of the Oil Deregulation Law of 1998, which transferred the power to regulate prices from the government to oil firms ostensibly to encourage competition among them and boost investments in the industry.

“We should ask our officials how soon is this going to be done because this is a problem not only now but also the future,” he said.

In the absence of price control powers, the DOE is banking on the suspension of excise tax under the Tax Reform Acceleration and Inclusion (TRAIN) Act as one of the measures to temper oil price hikes.

The amendment to the TRAIN Law was proposed to Congress in October last year.

Earlier this week, Abad said the technical working group has already submitted the draft bill for the temporary suspension of excise tax to the House committee on ways and means.

“The committee can already deliberate on it so it (can) be approved and endorsed to the plenary for debate and approval,” he said.