By Myrna Velasco
Consumers are in for another round of oil price hike this week with the pump prices of both diesel and gasoline products up by P0.65 per liter as the Dubai crude, the Asian oil market’s pricing benchmark, was still on a wild upswing last week.
Kerosene product prices are also up by P0.65 per liter this week, making a dent on households generally using it for their lighting as well as cooking; and will likewise be affecting industries leaning on it, such as the aviation sector.
Oil companies that already sent pricing notices on adjustments were Pilipinas Shell Petroleum Corporation, Seaoil, Total, PTT Philippines, and Phoenix Petroleum Philippines Inc. – all effective at 6 a.m. on Tuesday (September 11). Its industry competitors are anticipated to follow suit, it being the usual pull of market forces on pricing dynamics.
Dubai crude nearly reached US$75 per barrel last week, a climb from the US$73 per barrel average it has been reaching in the past weeks.
Market watchers have been raising fears of near-term supply crunch that could soon push prices to the edgy US$80 per barrel – and that in major part was instigated by the imposition of sanction on Iran.
And while incessantly rising petroleum prices continue to ignite social pressure upon the government, several oil companies have recently forwarded to the Department of Energy (DOE) the list of their stations that will be offering Pantawid Pasada discounts primarily for public utility jeepneys.
The Pantawid Pasada program is a hybrid subsidy scheme extended to public utility vehicles – one component is the mandatory subsidy provision under the Tax Reform for Acceleration and Inclusion (TRAIN) Act; and the other fraction accounts for the discounts offered by the oil companies as a corporate social responsibility (CSR) initiative.
The latest batch on the list of gasoline stations offering price discounts are Total Philippines and Chevron which still carries the Caltex brand at its retail networks.
Total submitted to the DOE at least 48 of its stations in Luzon and Visayas that have been offering Pantawid Pasada cost reductions, including those in the provinces of Batangas, Bulacan, Cavite, Laguna, Metro Manila, Pampanga, Zambales, Mindoro, Quezon, Iloilo, and Cebu.
For Chevron, it has been granting discounts to a wider base of customers in Metro Manila, the Ilocos Region, Calabarzon (Cavite-Laguna-Batangas Rizal and Quezon provinces), Western Visayas, Central Visayas, Northern Mindanao, Davao Region, SOCCSKSARGEN and the CARAGA Regions.
Oil rises as US drilling stalls
Global oil prices rose on Monday as US drilling for new production stalled and as the market eyed tighter conditions once Washington’s sanctions against Iran’s crude exports kick in from November.
US West Texas Intermediate (WTI) crude futures were at $68.23 per barrel at 0640 GMT, up 48 cents, or 0.7 percent, from their last settlement.
Brent crude futures climbed 64 cents, or 0.8 percent, to $77.46 a barrel.
US energy companies cut two oil rigs last week, bringing the total count to 860, energy services firm Baker Hughes said on Friday.
The US rig count has stagnated since May, after staging a recovery since 2016, which followed a steep slump the previous year amid plummeting crude prices.
Outside the United States, new US sanctions against Iran’s crude exports from November were helping push up prices.
Energy consultancy FGE said several major Iran customers like India, Japan and South Korea were already cutting back on Iran crude.
“Governments can talk tough. They can say they are going to stand up to Trump and/or push for waivers. But generally the companies we speak to … say they won’t risk it,” FGE said.
“US financial penalties and the loss of shipping insurance scares everyone,” it said in a note to clients.
Violence in Iraq, including a rocket attack on Basra airport on Saturday, also sparked fears of supply disruptions, although so far there have been no interruptions to oil exports.
Price subsidy mulled
Meanwhile, the Department of Energy (DOE) is exploring a new concept of “oil price subsidy” where contribution to the fund will come from industry players.
Energy Undersecretary Jesus Cristino P. Posadas said the conceptual framework of the subsidy kitty is symbolic of the defunct Oil Price Stabilization Fund (OPSF) when the oil sector was still under immutable government regulation.
“If prices are low, the oil companies can contribute to the fund. And they can draw from it when prices go up,” the energy official explained.
But he qualified “we are just exploring concepts for now…the Secretary has been finding ways how to stabilize prices,” referring to Energy Secretary Alfonso G. Cusi.
Posadas admitted though that this is an uphill policy fray for the department, “because when you say the word ‘stabilization, it seems it is a déjà vu to the OPSF.”
But rather than the government dipping its hand into setting up a subsidy fund, the energy official noted that this will be entirely private sector-driven.
“We will not require it because it is a deregulated market, so this is optional. This is just an idea of the Secretary on how price stabilization mechanism should be,” Posadas stressed.
egion, SOCCSKSARGEN and the CARAGA Regions.