Big-time oil price hikes next week

As crude prices inched up to the US$59-60 per barrel again in global trading, pump prices in the Philippines are expected to rise heftily next week at the range of P2.00 to P2.05 per liter for diesel products.

For gasoline products, the estimated price hikes will reach P1.30 to P1.35 per liter; while that for kerosene will escalate by P1.75 to P1.80 per liter.

According to the industry players, that had been based on the outcome of four-day trading in the international market last week, and price increases may still change depending on the outcome of Friday’s (January 11) trading.

Bellwether Dubai crude climbed anew to the US$59 per barrel scale; while Brent crude already crossed the US$60 per barrel price range.

Rising prices in the world market are largely predicated on more bullish economic growth assumptions and the widely anticipated adherence of the Organization of the Petroleum Exporting Countries (OPEC) and its Russian-led ally on targeted production cuts.

This coming week’s inflated climb in prices is perceived to be ill-omened because this will also be the main period when most of the gasoline stations will be implementing the additional P2.00 per liter in excise taxes for gasoline and diesel products, courtesy of the second tranche package of the Tax Reform for Acceleration and Inclusion (TRAIN) Act of the Duterte administration.

The oil companies are anticipated to implement the price hikes on Tuesday (January 15) – with some stations reflecting both the actual increases in prices and the jump in excise taxes.

The excise tax increases this year was initially suspended by the economic managers of the Duterte administration, but they reversed that decision after observing that global oil prices had been precipitously plummeting in the last quarter of 2018.

On the tax adjustments, the Department of Energy (DOE) emphasized that it has been intensifying monitoring of the petroleum retail networks that passed on the higher tax charges earlier than the expectation of the government.

Energy Secretary Alfonso G. Cusi went as far as warning the oil companies against “profiteering’ as he deployed teams from the department to carry out spot checks on excise taxes’ enforcements at gasoline stations in Metro Manila.

Show-cause orders have also been served to the oil firms, primarily, Petron Corporation, Flying V and Pilipinas Shell Petroleum Corporation for the early implementation of the tax adjustments.

The department’s Oil Industry Management Bureau (OIMB) explained that “a retail outlet’s imposition of excise tax depends on the exhaustion of the 2018 existing inventories.”

The DOE added “only new inventories in 2019, directly imported or local produced by refineries, are supposed to be covered by the second tranche of excise tax.”