The Philippines is looking at other oil suppliers as the war in the Middle East raises fuel concerns
By Kenneth Christiane L. Basilio, A reporter
The Philippines is exploring direct talks with foreign governments and encouraging local oil companies to seek alternative suppliers as the conflict in Iran enters its second week, Energy Secretary Sharon S. Garin said Monday, noting that current stocks are enough to last until April.
“The Philippines is in a good position,” said Mrs. Garin told members of the conference during the hearing. “We hope for the best but prepare for the worst.”
Domestic oil companies have agreed to raise prices this week, with price increases from P2.50 to P10 per liter, as world oil prices continue to rise. Overall, the cost of gasoline could increase from P17 to P24 per liter, he said.
The Philippines is a major oil importer and relies heavily on crude from the Middle East, which accounts for about 98% of its imports, according to Energy Department data.
Petrol prices have increased for eight consecutive weeks, diesel and kerosene for 10. Last week, oil companies increased gasoline by P1.90 per liter, diesel by P1.20, kerosene by P1.50.
The latest price pressures follow the increasing US and Israeli strikes on Iranian targets, Tehran’s retaliatory attacks, and the partial closure of the Strait of Hormuz, through which about 20 percent of the world’s oil and gas exports flow into the sea.
US President Donald J. Trump has signaled that military action will continue “as long as necessary” to curb Iran’s nuclear ambitions and pursue regime change.
White House Press Secretary Caroline Leavitt said on Saturday that achieving Washington’s goals could take “four to six weeks.”
Ms. Garin warned that long-term disruptions will weigh heavily on the Philippine economy. “The two-week price change will have a long-term impact on our economy because prices will be adjusted and fares will increase,” he said.
The Secretary of Socioeconomic Planning, Rosemarie G. Edillon, said that the ongoing conflicts could increase the rate of inflation.
The simulation agency estimated inflation at 6.3% to 7.5% in March under the “worst case,” with similar levels expected in April.
In this scenario, crude oil prices could reach $140 per barrel but may drop over time. However, higher prices could continue until September, he said.
The government is also looking at policy measures to reduce the economic impact. Finance Secretary Karlo Fermin S. Adriano said the suspension or elimination of the excise tax on fuel products could cost the government an estimated P136 billion from May to December, depending on the time.
Proposals to cut the fuel tax have gained momentum in Congress, based on a 2017 law that allowed the tax to be suspended if global emissions exceeded $80 per barrel for three months, a provision that expired six years ago.
Ms Garin said authorities were closely monitoring warehouses and imports, while local companies were breaking up the chains.
“The government is always preparing to prevent a deficit that could seriously affect the economy,” he added.
