THE fuel price increases that took effect in the Philippines this week were the result of the world’s oil prices rising after Saudi Arabia announced it would cut its oil production. Saudi Arabia is the world’s biggest producer and exporter of crude which the world’s big oil companies process into gasoline, diesel, kerosene, and other fuel products.
Next to Saudi Arabia in oil exports is Russia; the US, while a major producer, keeps most of its oil for its own use. The Philippines imports most of its crude oil needs from Saudi Arabia and Kuwait.
Last Monday, PTT Philippines, Eastern Petroleum, Jetti Petroleum, Chevron Philippines, Petro Gazz, and Pilipinas Shell announced hefty price increases – P2.40 per liter for diesel, P1.40 for gasoline, and P2 for kerosene.
Eastern Petroleum stressed that the price increases in the gas stations were due only to increase in world oil prices. They do not yet include the second tranche of the TRAIN law – P2 per liter of diesel and other fuel – plus Value-Added Tax of 24 centavos. When these are included in the gasoline companies’ prices, these will go up by another P2.24 per liter.
The first to raise their prices were 369 gasoline stations, as monitored by the Department of Energy. In the coming weeks, the rest of the country’s 8,006 stations will be reflecting the world price increase along with the TRAIN tax and VAT.
And that is not the end of the price movements. In February, as demand increases, the world price is expected to rise even further.
With all these developments, many are asking: “Are we facing a repeat of the long period of high prices we had to endure in 2018?
We recall that market prices started rising in January, 2018. The government rejected claims it was due to the TRAIN law. But it soon became obvious that the fast-rising market prices were due to the combination of high world oil prices, the new TRAIN tariff on fuel, and price manipulation.
By May in 2018, the inflation rate had hit 4.5 percent and by July a five-year high of 5.7 percent. It continued to rise to 6.4 percent in August, to 6.7 percent in September. It then began to subside as government responded with a flood of low-priced rice.
We have since recovered from that year of high prices but now there are fears that this new year of 2019 may see a repeat of that terrible year, because world oil prices are rising again and the 2nd tranche of the TRAIN tax on diesel is now in effect.
We ask the government’s economic managers to keep a close watch on developments in the next few weeks so that they can make the needed recommendations to President Duterte and our other national officials.
