The Department of Energy (DOE) said oil supply remains stable amid higher prices caused by the tensions between the United States and Iran as well as the implementation of the last tranche of increased fuel excise taxes.
DOE undersecretary Felix William Fuentebella said there is no cause for alarm because the country implements a minimum inventory requirement of 15 days for finished products, 30 days for crude and 7 days for liquefied petroleum gas.
Fuentebella said the DOE can consider hiking the present minimum inventory requirement.
The DOE is conducting studies on improving the country’s petroleum strategic reserve, citing the possibility of leasing a floating oil storage before the government completes the construction of an onshore facility.
Bilateral agreements are also being crafted with Saudi Arabia, Qatar, Brunei and Russia for assured fuel supply in case of events that could cause disruptions in the global market.
Fuentebella said the DOE is further encouraging investments in local oil resource explorations and in the use of renewable energy sources to lessen the country’s dependence on imported fuels over the long-term.
Bong Suntay, president of the Independent Philippine Petroleum Companies Association, said the global tensions as well as the updated fuel excise tax must be given focus as they will push local oil prices up.
“Tension between the US and Iran have pushed the international price of crude upwards. The implementation of the third tranche of excise tax will definitely push the price up further,” Suntay said in a text message.
Vic Dimagiba, president of Laban Konsyumer Inc., said consumers should be more vigilant in the local market rather than the international markets especially that the amount of oil being imported by the Philippines from Iran is “negligible.”
“Hopefully, the international market continues to behave well as we shall experience slight adjustment in fuel retail prices this week. We need to strengthen price monitoring when the third tranche of excise taxes will start being passed on to the consumers,” Dimagiba said.
Based on data from the DOE, as of first half 2019, 73.9 percent of the country’s total crude imports came from the Middle East. However, Iran is not considered a primary source.
The major sources of the country’s crude imports are the United Arab Emirates which corners 32.2 percent; Kuwait, 26.3 percent; Russia, 14.5 percent; Saudi Arabia, 12.2 percent; Malaysia, 6.8 percent and; Oman, 2.6 percent.
Analysts said soaring oil prices stoked fears of inflationary pressure.
Oil prices shot more than 2 percent higher and Brent rose above $70 a barrel after US President Donald Trump threatened to impose sanctions on Iraq and retaliate against Iran if it strikes back after the killing of its top commander.
Trump’s threat against Iraq, the second largest producer among the OPEC, comes after its parliament voted in favor of expelling US troops.
“The escalating tensions between the United States and Iran will be a big factor on inflation in the Philippines. Since it is a net oil importer, any significant oil rally would affect both inflation and the currency,” Rachelle Cruz, analyst at AP Securities said.
Meanwhile, Fuentebella said the impact of higher excise tax on fuel will vary per retail station, depending on the depletion of old stocks.
Under the third and last tranche of fuel excise tax that took effect January 1, additional levy of P1.12 per liter is slapped on gasoline and kerosene and P1.68 per liter on diesel.
Petron, Shell and Seaoil announced yesterday it was slashing the per liter cost of gasoline by P0.10 but was raising diesel and kerosene prices by P0.40 and P0.30 per liter, respectively.
Phoenix Petroleum and PTT adjusted the per liter price of gasoline downward by P0.10 and diesel upward by P0.40 per liter.