Smaller fuel prices increases seen

Smaller Fuel Price Increases Expected A Relief for Consumers Amid Ongoing Crisis

As the global energy market continues to grapple with the impact of the ongoing crisis in the Middle East, fuel prices are expected to increase once again. However, according to industry sources, the spike will be less pronounced than previous weeks.

According to a local oil industry source, the per-liter price of diesel is expected to rise by P11 to P12, while gasoline prices may remain steady or increase by around P3. This estimate is based on the four-day trading of Mean of Platts, Singapore, the pricing index for refined goods in Southeast Asia.

This marks the 11th consecutive week that fuel prices will increase. However, the relatively smaller price hike can be attributed to signs that the conflict may be de-escalating, resulting in a drop in crude oil price benchmarks.

In light of this development, President Ferdinand Marcos Jr. has expressed his openness to proposals aimed at repealing the Oil Deregulation Law and removing the value-added tax (VAT) on fuel, as part of the government's efforts to cushion the impact of the war in the Middle East on the people.

Fiscal Relief Measures Underway

The government is focused on delivering immediate solutions to the energy problems, Marcos said. He emphasized that nothing is being discounted, meaning they are discussing everything that can be done so that they can do something to help alleviate the impact of the war in the Middle East.

To address the issue, several fiscal relief measures have been proposed. One such measure is Senate Bill 1984, filed by Senate President Vicente Sotto III, which seeks to repeal Republic Act (RA) 8479, or the Downstream Oil Industry Deregulation Act. This bill aims to give back to the state the authority to manage fuel prices.

Another proposal is to suspend or reduce the VAT on fuel products to provide relief to Filipinos grappling with soaring pump prices. Senate Bill Aquino has filed a measure that would grant the president authority to adjust VAT rates on oil products.

Oil Company Support

Representatives from oil companies have expressed support for these proposals, noting that removing the 12-percent VAT would translate more directly into lower pump prices. Tanya Samillano, representing small oil players, said eliminating VAT simplifies price adjustments.

Department of Finance Support

Aquino has urged the Department of Finance to help quantify the potential savings for consumers, emphasizing the need for data-driven policy decisions. He said the Senate is prepared to act swiftly on the proposal if endorsed by economic managers.

Concerns Over Excessive Profits

Senator Sherwin Gatchalian has raised concerns over potentially excessive profits of oil companies as global fuel prices surge. In a chance interview, Gatchalian criticized the pricing mechanism used by oil firms, particularly the replacement cost method, which bases pump prices on current market rates rather than the actual, often lower, cost at which existing inventory was purchased.

Gatchalian emphasized that opacity in procurement costs makes it difficult for regulators to determine whether oil firms are guilty of profiteering. He stressed that transparency is crucial to ensure that oil companies are not taking advantage of the crisis.

Conclusion

As fuel prices continue to rise, it is essential for the government to implement fiscal relief measures that provide immediate solutions to the energy problems. The proposed repeal of the Oil Deregulation Law and suspension or reduction of VAT on fuel products can help alleviate the impact of the war in the Middle East on the people.

By integrating fiscal relief measures with transparency and accountability, the government can ensure that oil companies are not profiteering from the crisis. It is crucial to monitor the industry for signs of anticompetitive behavior and profiteering, as well as to secure a stable supply of fuel products.

With the ongoing crisis in the Middle East, it is essential for the government to demonstrate its commitment to providing fiscal relief measures that benefit the people.

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Edward Lance Arellano Lorilla

CEO / Co-Founder

Enjoy the little things in life. For one day, you may look back and realize they were the big things. Many of life's failures are people who did not realize how close they were to success when they gave up.