THE price of fuel could climb sharply next week if the conflict in the Middle East continues to worsen, a source in the local oil industry said Friday.
Diesel could surge to P20 per liter and gasoline to P10 per liter because of massive disruptions in the global oil supply as the United States and Israel unleash a fresh wave of aerial attacks on Iran, the source said.
He based the estimates on the four-day trading of Mean of Platts, the pricing basis of refined goods in Southeast Asia.
Pump prices went up for the eighth straight week, even before the attacks on Iran were launched a week ago.
“Oil prices jumped as markets were affected by crude shortages due to the conflict in the Middle East.,” the source said. “Asian refiners are struggling to secure prompt replacement crude cargos, with some Chinese refiners already cutting runs and suspending fuel exports, resulting to a reduced available supply in the region.”
Another factor pushing up oil prices is the closure of shipping channels in the Gulf by Iran. Because oil tankers are unable to make shipments, “storage tanks across the Middle East are rapidly filling up, forcing producers to cut output if they can’t resume exports soon,” the source added.
The Department of Energy (DOE) has asked oil companies to stagger the increases for next week, but no agreement has been reached.
The DOE is also studying ordering the Philippine National Oil Co. to procure at least a million barrels of diesel to secure domestic supply.
During a hearing of the Senate Committee on Foreign Relations on Friday, DOE Oil Industry Management Bureau Director Rino Abad said diesel could hit P80 per liter if the increase is not staggered.
Abad refrained from giving an exact projection, but warned that the impact of the crisis in the Middle East could be more severe than the price shocks experienced during the Russia–Ukraine War.
In the House of Representatives, Ways and Means Committee Chairman Rep. Romero Quimbo said a major crisis could be averted once President Ferdinand Marcos Jr. is given emergency powers to suspend or reduce the excise taxes on fuel.
Quimbo said House Bill 8257, which he filed on Monday, would amend Sections 148 of the National Internal Revenue Code which would establish a “lawful and conditional mechanism for temporarily suspending fuel excise taxes when extraordinary circumstances arise.”
In a phone interview with The Manila Times, Quimbo said his bill would give the president the discretion to “either remove or partly remove on select or all petroleum products” if the Dubai Crude price hits $80 per barrel or higher for three consecutive months, or through a declaration of a state of emergency or calamity arising from petroleum product increases.
These provisions, Quimbo said, will act as safeguards against any possible abuse in the granting of such emergency powers to the president.
Quimbo said the revenue loss if the president decides to suspend the fuel excise tax could reach P10 billion a month, based on last year’s collection of P128 billion.
But if the government does not intervene, the economy could continue to contract as the prices of commodities rise.
“Petroleum is a basic component of any product that you see in the market, whether in the course of its production, in the course of its farming, or if it’s even important, in the course of its logistics, lahat ’yan nagbabayad ng gasolina (everyone pays for gasoline). So if you don’t intervene in terms of the price of petroleum, then the price of commodities will escalate even further, driving up inflation,” Quimbo said.
In a separate statement, Batangas Rep. Ryan Recto said the passage of the bill granting the president powers to reduce or suspend the fuel excise tax will provide the government with a “flexible mechanism in shielding Filipino consumers from the inflationary impact of volatile global oil prices.”
“The current statutory excise tax regime imposes a fixed per-liter tax that provides a stable revenue stream but lacks the flexibility to mitigate the sudden and severe inflationary impact of global price volatility,” Recto said.
Albay Rep. Raymond Salceda said the government is now collecting “significant unplanned VAT revenues from the price increases” which could be redirected to affected sectors rather than absorbed into the General Fund.
“Most likely we will raise an additional P2 to P2.3 billion in VAT every single month as a result of the price increases. That can help if given to the affected sectors, mainly transport, farmers, fisherfolk,” Salceda said.
