PRESIDENT Ferdinand Marcos Jr. has ordered the creation of a crisis committee to ensure the country’s food and fuel supplies remain stable amid the war in the Middle East, Malacañang said on Monday.
In a press briefing, Presidential Communications Office Undersecretary Claire Castro maintained that even before there were suggestions for such a body to be established, the president has already ordered its creation.
Castro said the main objective of the crisis committee is to ensure that there will be no disruptions in the supply of essential goods such as petroleum products and food.
She also said while the hostilities in the Middle East have triggered prices of oil to skyrocket, an oil supply crisis has yet to be declared in the Philippines.
What is happening in the country is a “price disruption” that is also happening in other parts of the globe, Castro said.
“At present, this is not considered an oil crisis because we have complete and sufficient oil supply. The DOE (Department of Energy) and this government, upon orders of President Marcos, [are] working to ensure there will be no disruptions in the supply of oil and petroleum products in the country,” Castro said.
While the government would like to temper high pump prices, the Oil Deregulation Law prevents it from doing so since prices are based on prevailing benchmarks in the international market and not on acquisition costs.
“Under the deregulated downstream oil industry framework, based on RA (Republic Act) 8479, oil companies will base their product prices on prevailing international benchmark prices primarily Mean of Platts Singapore, or MOPS, in each pricing cycle. So, oil companies are using FIFO — First In First Out accounting. This is what they are using now where the product they are selling is based on the price at current or near current international market prices and not on the historical acquisition cost when it comes to their inventory,” Castro said.
“So, their pump prices now reflect current global market conditions even though they purchased their inventory at a lower price. That’s what exists in this type of system if there is an Oil Deregulation Law,” she added.
To help ease the burden of the public, particularly those from the transport sector, the government, through the DOE, are now in negotiations for additional fuel imports.
Labor wants representation
Organized labor called on President Marcos to include a workers’ representative in the “crisis committee” being created to address the Middle East conflict’s impact on the country.
The Trade Union Congress of the Philippines (TUCP), the largest national trade union center in the country, made the appeal on Monday.
The government, the TUCP said, should prioritize workers’ needs and include them in the decision-making process, as they are often the hardest hit by economic shocks yet are frequently excluded from decision-making tables.
“If workers are not represented in the committee, who else will be the one to tell the true state of the nation?” the group said.
The union noted that workers’ demands for a wage hike, value-added tax abolition and subsidies are being met with silence, and said excluding them from the crisis committee will only make things worse.
“A crisis committee that fails workers will fail the nation,” the TUCP said.
Worst-case scenario
Also on Monday, Sen. Sherwin Gatchalian said a Senate panel is coming up with a worst-case projection where the Middle East war extends for up to six months and oil prices surge to $200 per barrel.
“In such a scenario or at any point of the conflict, the country should be ready to implement an appropriate and targeted contingency plan,” Gatchalian said in a statement.
“We don’t have any control of what [is] happening outside the country. But the important thing is we are ready [to address the situation],” he said in Filipino.
The senator said this was the reason why he pressed for an “accelerated timeline” for the Senate’s ad hoc committee hearings to address the impact of the Middle East conflict on the local economy.
Gatchalian, chairman of the Proactive Response and Oversight for Timely and Effective Crisis Strategy (Protect) Committee, raised the urgency of crafting a contingency framework within one to two weeks.
“Our timeline here is hopefully [we finish the contingency framework] in one or two weeks because there is a sense of urgency,” said Gatchalian, also Senate Committee on Finance chairman.
He said the Protect committee was formed as the Senate’s “proactive measure in the face of multifaceted challenges besetting the country amid the aggravating situation in the Middle East.”
Sen. JV Ejercito, meanwhile, sought the creation of an interagency task force to prepare for the impact of the Middle East war on the economy and energy sector.
The senator urged the government to craft contingency measures amid risks of fuel supply disruptions brought by the US-Israel war on Iran.
He said that the Congress has already authorized the president to suspend excise taxes on fuel to help cushion price shocks on consumers.
“Let us not wait for the crisis to worsen. We should be proactive and prepare for the worst, and view it just like a Covid (Coronavirus disease [2019]) pandemic situation,” Ejercito said in Filipino and English.
He said the war’s impact “extends beyond fuel prices as it could also affect supply chains and production costs worldwide.” Ejercito noted that many Asian economies, including China, rely heavily on Middle Eastern oil, which in turn powers manufacturing and exports.
“It has a domino effect because the global market is dependent on oil from the Middle East,” the Senate deputy majority floor leader added.