Pump prices continue to go up this week

Fuel prices extended their weeks-long run of increases, although the pace of hikes has begun to ease as volatility in the global oil market is showing signs of subsiding, the Department of Energy  chief said on Monday.

Initial estimates showed that gasoline prices will increase by up to PHP 6.47 per liter, diesel by up to PHP 11.88 per liter, and kerosene by up to PHP 13.66 per liter, Energy Secretary Sharon S. Garin said.

“The international oil market has calmed down. The last few days, it looks like there was not much spike (in prices),” she told DZMM radio partly in Filipino.

Jetti Petroleum, Inc. said that it will implement a one-time price hike of PHP 18 per liter for diesel and PHP 8 per liter for gasoline, starting Tuesday morning.

Seaoil Philippines, Inc. and Unioil Petroleum Philippines, Inc. are also implementing one-time price hikes, with diesel going up by PHP 16.80 per liter and gasoline increasing by PHP 9.70 per liter.

This week’s adjustments would mean prices of diesel and kerosene would increase for a 13^th straight week, while gasoline will go up for an 11^th week in a row.

The prevailing per-liter gasoline and diesel prices in the National Capital Region may go as high as PHP 98.07 and PHP 126.78, respectively, while kerosene costs may reach PHP 157.45 per liter.

Ms. Garin admitted that the fuel prices in the Philippines are higher compared with neighboring countries that subsidize oil prices.

“Also, we don’t have a robust refinery or oil industry. We only have one refinery, but that’s one of the reasons prices increase quickly. Other countries can subsidize, but we don’t do that because of the Oil Deregulation Law,” she said.

The Philippines is a net importer of crude oil and sources most of its supply from the Middle East, making the country vulnerable to global crude price swings.

‘Steady supply’

The Energy chief said that the current oil supply is “steady” until the first week of May.

To augment fuel supply, the Philippines is seeking to procure at least two million barrels of oil from other countries.

The country has already secured 500,000 barrels of diesel last week and is trying to lock in an additional 500,000 barrels, Ms. Garin said.

“We still have to lock in the contract, then it will be loaded and shipped here, so it may take another one to two weeks, depending on the origin,” she said.

Asked if the current situation can be considered an “oil crisis,” Ms. Garin sidestepped the question.

“For me, the worst or the crisis that we would face is on supply. We will lack supply, have rationing or we will really fall short,” she said. “In this case, the Philippines has supply. It’s sufficient for the industry and day-to-day consumption.”

Currently, the Strait of Hormuz, a chokepoint for one-fifth of the world’s oil, remains open to all shipping except vessels linked to “Iran’s enemies,” Reuters reported.

Fatih Birol, executive director of the International Energy Agency, said the crisis brought by the ongoing conflict in the Middle East is “very severe” and worse than the two oil shocks of the 1970s, as well as the impact of the Russia-Ukraine war on gas, Reuters said, citing the National Press Club.

He said that the “single most important solution to this problem is opening the Hormuz Strait.”

Asked to comment, Jose M. Layug, Jr., executive board member of the independent energy research institute Philippine Energy Research & Policy Institute, said that the current crisis is “worse” than what happened in 2011 where sanctions against Iran drove up oil prices.

“The problem will not end soon. We need to adopt aggressive measures to reduce demand for petroleum products. It has to be a whole-of-government approach where every department needs to craft plans and programs towards possible supply shortage and price shocks,” Mr. Layug told BusinessWorld. — Sheldeen Joy Talavera, Reporter