DTI: Rising oil prices to increase production costs by 3.5%
MANILA, Philippines — An increase in oil prices will drive up production costs by 3.5 percent, the Trade department said on Wednesday after local firms declared another round of fuel price hikes this week.
"In our formula...[the rise of petroleum prices] will hit production costs and increase them by 3.5 percent. That's less than 10 percent. But we can't discount this because 3.5 percent is still huge," DTI Secretary Ramon Lopez said in Filipino during an interview with Dobol B TV on Wednesday.
He did not elaborate, however, if the current round of oil price increases have already triggered hikes in production costs.
The rise in production costs will form the basis of the department in deciding whether or not to increase the prices of goods, according to Lopez.
If groups wanted to raise prices, they first had to submit a letter to the DTI which would study the increase before making its decision.
He assured the public that the SRP or suggested retail price of products hasn't changed yet, but said the DTI is monitoring the geopolitical conflict between Russia and Ukraine- one of the factors which caused supply disruptions in the global market.
Lopez's statements come amid growing concerns on the sustained hikes in local pump prices, which saw another round of increases this week.
This week, local pump prices rose for the eighth straight week, with gasoline going up by P0.8 per liter, diesel by P0.65 per; and kerosene by P0.45 per liter.
This prompted lawmakers to give various solutions to remedy the issue, with Senator Win Gatchalian pushing for the institutionalization of the Pantawid Pasada Program which hands out fuel subsidies to public utility vehicle operators; and Senators Manny Pacquiao and Ping Lacson supporting the suspension of the collection of the fuel excise taxes.
The Tax Reform for Acceleration and Inclusion (TRAIN) law, which details the excise taxes for various products including fuel, says the excise tax for gasoline currently stands at P10 per liter, diesel at P6 per liter and kerosene at P5 per liter.
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