Oil firms warned vs profiteering
DOE finds 444 gas stations already enforcing 2nd tranche of fuel tax
The Department of Energy (DOE) on Thursday warned oil companies that they will be criminally charged should they be found imposing the second tranche of the fuel tax on old inventories.
The warning was issued after the DOE found out that 444 gasoline stations – 369 gas stations of Petron Corporation, 46 from Pilipinas Shell Petroleum Corporation, and 29 from Flyng V – are already imposing the 12.00 excise on fuel.
Energy Secretary Alfonso G.
Cusi said the DOE’s monitoring is now focused on ensuring that consumers “do not become subjects of profiteering,” hence, it already served showcause orders (SCOs) to the specified oil companies.
He stressed that the DOE will be “validating the prices of their fuel products to check whether they have already imposed the second wave of excise taxes.”
If the oil companies are found to have violated the Tax Reform for Acceleration and Inclusion (TRAIN) Act, they shall be facing criminal charges, particularly estafa cases.
Beyond the show-cause orders, the DOE noted that it is also undertaking spot inspections of gasoline stations to counter-check at the ground if industry players have been complying judiciously with the mandates of the TRAIN Law.
On Thursday, the DOE deployed two teams from its Oil Industry Management Bureau (DOE-OIMB) to retail outlets in Caloocan, Quezon City, and Malabon “to serve the SCOs and validate their documents relative to the imposition of excise tax and its corresponding value added tax.”
Prior to month-end of December, 2018, the oil companies were required to submit a notarized inventory report of their petroleum products. The prescribed submission deadline was January 8, 2019.
The DOE emphasized that “these will help validate the exhaustion of old inventories,” and such will also indicate last product withdrawals still subject to the old tax rate and which ones need to be levied already with the higher taxes.
World oil prices fall
Meanwhile, Reuters reported from Singapore that oil prices fell by about 1 percent on Thursday on swelling US supply and amid a cautious reaction to trade talks between the United States and China, the world's two largest oil consumers that finished without concrete details to ending their dispute.
US West Texas Intermediate (WTI) crude oil futures were at $51.80 per barrel at 0432 GMT, down 56 cents, or 1.1 percent, from their last settlement.
International Brent crude futures were down 0.9 percent, or 57 cents, at $60.87 per barrel.
Both oil benchmarks rose by around 5 percent the previous day as financial markets around the world surged on the hopes that Washington and Beijing may soon be able to end their trade dispute, soothing fears of an all-out trade war between the two biggest economies and its possible impact on global growth.
By Thursday, however, the positive feelings ebbed because of a lack of details on the talks despite a warm statement from China on the outcome, and financial markets took a breather from the rally.
Vandana Hari of consultancy Vanda Insights in Singapore said in a note that oil prices dropped “as optimism fuelled by the US-China trade talks earlier in the week appeared to have run its course and official statements after the conclusion of three days of negotiations, while indicating modest progress, lacked details.”
Meanwhile, US bank Morgan Stanley cut its 2019 oil price forecasts by more than 10 percent on Wednesday, pointing to “weakening economic growth expectations” and rising oil supply from especially from the United States as reasons for their lower price forecast.
Morgan Stanley now expects Brent to average $61 a barrel this year, down from a previous estimate of $69 a barrel, and US crude to average $54 per barrel, against a prior forecast of $60.
The main source of new supply is the United States, where crude oil production remained at a record 11.7 million barrels per day (bpd) in the week ending Jan. 4, the Energy Information Administration (EIA) said on Wednesday.
That has resulted in swelling fuel inventories.
Gasoline stocks rose 8.1 million barrels, to 248.1 million barrels, marking the largest weekly rise since December 2016, the EIA said. Distillate stocks swelled by 10.6 million barrels, to 140.04 million barrels.
Although crude stocks dipped by 1.7 million barrels, to 439.74 million barrels, they remained above their five-year seasonal average of 435 million barrels.
The surge in US crude production runs counter to efforts led by the Organization of the Petroleum Exporting Countries (OPEC) to cut supply aimed at reining an emerging glut.
“Balancing the market would require OPEC discipline to continue well into 2020,” Morgan Stanley said.