MANILA, Philippines — The Department of Energy (DOE) said Tuesday that it is working to encourage the competitive pricing of oil products, while supporting targeted assistance to sectors amid the constant rise in oil prices driven by tight global supply.
Since the start of January this year, gasoline experienced a net increase of P7.95 per liter(/L), diesel at P10.2/L and kerosene at P9.1/L.
"In the absence of price control under the deregulated regime and the untargeted subsidy policy just like the previous OPSF (Oil Price Stabilization Fund), the prevailing policies now are to ensure the implementation of competitive price and for the Government to offer targeted relief assistance," DOE Oil Industry Management Bureau Director Rino Abad told Philstar.com over Viber on Tuesday.
The Energy department has been pushing for the unbundling of fuel prices- which it submitted as a proposal to the Lower House as part of the agency's suggested amendments to the Oil Deregulation Law. Abad said they will work closely with Congress for the approval of the amendments.
Under the Downstream Oil Industry Deregulation Act of 1998, the state is required to liberalize and deregulate the oil industry so firms can enjoy a competitive market and continuous supply of high quality and environmentally-clean petroleum products.
Right now, several oil companies, which participated in consultations with the DOE, are providing discounts as part of their promotional programs to benefit motorists.
"These discounts were implemented directly on the ground via the gasoline stations directly implementing the promo programs. These discounts range from as low as P1 to as high as P4 per liter," Abad said.
For him, some government initiatives which seek to provide targeted assistance to affected sectors include:
- The Pantawid Pasada Program which distributes fuel cards to subsidize the public transportation sector. The program received a P2.5 billion allocation from Congress for its continued implementation this year.
- The Direct Cash Subsidy Program under the Bayanihan To Recover As One Act 2 which provides financial aid to PUV operators badly hit by the health protocols designed to curb the spread of COVID-19. During the program, the transportation sector and hard-hit businesses received a total of P2.6 billion under the program. Any additional cash assistance under this program requires the approval of the finance and budget departments, and the passage of a law by Congress.
- A P500-million fuel discount for qualified farmers and fisherfolk that will be rolled out by the Agriculture department, which is in the final stages of completing the program's implementing guidelines.
Abad said if the government is not inclined in providing additional subsidy to the transport sector, it can also opt to approve a reasonable fair hike.
"This option is within the jurisdiction of the LTFRB (Land Transportation Franchising and Regulatory Board), and the DOE can assist in providing the necessary report and data on price increase as basis for the fare hike approval," he said.
'Global supply is very tight'
Abad explained that global oil supply "remains very tight, sustaining the uptick in prices."
According to him, some other factors affecting the supply of oil include:
- Supply disruptions brought about by the escalating tension between Russia and Ukraine; and turmoil in Libya, among others.
- Thinning of OPEC+ (The Organization of the Petroleum Exporting Countries Plus) reserves which remains a top concern for oil markets
- Low crude and refined products inventories
Back home, pump prices have gone up for the seventh consecutive week. Local oil firms raised gas prices by 1.2/L, diesel by P1.05/L and kerosene by P0.65/L this week.
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