Higher pump prices seen

MANILA, Philippines — Another round of fuel price hikes is set this week as international prices continue to pick up on rising global demand with easing quarantine restrictions across the globe.

The price hike this week does not yet include the additional 10 percent duty imposed on imported crude and petroleum products, according to the Department of Energy (DOE).

“Diesel should increase by P0.50 to P0.60 and gasoline should increase by P1.30 to P1.40,” Unioil Philippines said in an advisory.

This would be the third week gasoline prices would be increased and the second week for diesel and kerosene.

Global oil prices climbed anew in the past trading week.

In particular, US oil prices closed the week seven percent higher – its highest since March –underpinned by increasing fuel demand as several countries eased travel restrictions even amid the coronavirus pandemic, Reuters reported.

Meanwhile, Saudi Arabia – the de facto leader of Organization of the Petroleum Exporting Countries (OPEC) – announced plans for further supply cuts in June. Other OPEC members have expressed intention to extend production cuts.

This week’s fuel price hike does not yet factor in the additional 10 percent duty on crude oil and refined petroleum products as stipulated in Executive Order No. 113 signed by President Duterte to raise funds for efforts to stop the spread of the coronavirus disease 2019 (COVID-19) and ease its impact on livelihood.

DOE-Oil Industry Management Bureau (OIMB) director Rino Abad said the additional tariff would only apply to new stocks of oil imports.

“We required oil companies to follow the same format as with the imposition of excise tax. Their existing inventory should not have additional import duties. They need to finish their stocks first before imposing the additional 10 percent tariff,” he said.

Oil companies are required to submit reports to the DOE showing their current oil inventory levels for monitoring purposes.

The department expects the higher tariff to affect oil prices by May 21. The DOE estimates the government would collect nearly P7 billion from the additional import duty. “The estimated income for government from May, if it’s implemented soon until December 2020, is P6.78 billion. This will help a lot in the fight against COVID-19,” DOE undersecretary Felix William Fuentebella said.

DOE’s estimates showed the additional import duty on fuel products would result in an increase of 60 centavos per liter on gasoline, 80 centavos on diesel, 55 centavos on kerosene, P1.82 per liter liquefied petroleum gas (LPG), 55 centavos per liter on Jet A-1 and 66 centavos on fuel oil.

After a 50 percent drop in oil sales volume starting March, sales volume is seen to increase by 30 percent in June, 60 percent in July and revert back to the January level by August until December as government slowly eases quarantine restrictions, Abad said.