The government is closely monitoring the impact of the escalating tensions abroad, as oil prices rose following the United States’ air strike which killed a top Iranian military general.
Philippine officials said government agencies are keeping an eye on global and domestic prices as oil price hikes may occur over the short-term following the developments overseas.
“Impact on economy – likely oil price hikes in the short run and OFWs (overseas Filipino workers) cum remittances over the longer run if tensions escalate further and persist,” Ernesto Pernia, socioeconomic planning secretary, said in a text message over the weekend.
“The Department of Energy, Department of Finance (DOF), and other relevant agencies are continuously monitoring global and domestic oil prices to evaluate and implement appropriate courses of action,” Antonio Joselito Lambino, DOF spokesperson and assistant secretary, also said via text message last Friday.
In an interview in San Juan City last Saturday, Trade Secretary Ramon Lopez said the Philippines like the rest of the world is vulnerable to the world oil price and expressed hope the tensions would not escalate to affect oil prices.
“That’s the uncertainty but that’s beyond our control. We will have a Cabinet meeting (today), on the side that might be discussed,” Lopez added.
But he said some preparations can be done such as positioning of supply.
“You can position only to a certain extent, and you cannot store so much inventory,” Lopez said.
According to a recent Reuters report, Brent crude futures rose by as much as 4.5 percent to $69.2 per barrel, the highest since the Saudi oil attacks in September last year.
Meanwhile, the excise tax on fuel has already increased at the start of the year with the continuous implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Law.
The excise tax on diesel rose by P1.50, from P4.50 in 2019 to P6 per liter this year. For gasoline, it went up by P1 per liter, from P9 last year to P10 for 2020.
The TRAIN Law provides a suspension mechanism where the next increase shall be temporarily suspended, but only if the average price of Dubai crude (based on Mean of Platts Singapore or MOPS) reaches or exceeds $80 per barrel over a three-month period.
“The TRAIN Law is clear regarding the suspension mechanism,” Lambino said.
“If the three-month average price of Dubai crude (MOPS) reaches $80 per barrel before the next increase, that scheduled increase will be suspended,” he added.