DOE backs one-time P7/liter fuel price hike

Published December 13, 2017, 10:00 PM By Myrna M. Velasco

https://business.mb.com.ph/2017/12/13/doe-backs-one-time-p7liter-fuel-price-hike/

Consumers cannot lean on to any “price cushioning measure” as the Department of Energy (DOE) is sounding off this early that it will be supporting the proposed one-time hike of about P7.00 per liter in petroleum products upon the passage of the Duterte administration’s tax reform program.

The latest calculation on gasoline price hikes would be as much as P7.00 per liter, that is at the latest bicameral deliberations of the Tax Reform Acceleration and Inclusion (TRAIN) Bill, that is now inching very close to getting it signed into law by President Duterte.

For diesel, the price hike would still be at P6.00 to P6.35 per liter, if referenced on the latest prices at the gas petroleum pumps.

“We cannot enforce staggered increases because the fuel market is deregulated, we cannot meddle in the affairs of the industry,” Energy Secretary Alfonso G. Cusi said.

In jest, he noted that if pump costs would soar almost to the level when prices had been at US$100 per barrel, that may become part of the solution to the country’s deplorable traffic problem.

Cusi stressed that “when oil prices were very high, people learned to manage their trips. But when prices have been hitting rock bottom, everyone has been buying cars. So if we have high prices again, that might lessen the traffic,” he said.

He admitted though that the energy sector will be pummeled with cost increases on two fronts: Both in the oil and electricity sectors.

For power, it will be whacked with rate hikes due to higher coal excise taxes as well as the higher costs of diesel for power generating facilities that have been serving the “peaking needs” of the on-grid power system; while it is also worth noting that this is a dominant fuel for off-grid areas served by the Small Power Utilities Group (SPUG) of the National Power Corporation.

“Because many SPUG areas are running on diesel, definitely the UCME (universal charge for missionary electrification) will go up,” the energy chief stressed.

The UCME is a subsidy for off-grid and far-flung areas of which costs are being passed on to all electricity consumers.

“These could come in small increments, but if you would compute that in totality, they could sum up to billions,” the energy chief said.

He added “we don’t like electricity rates to increase because it will make our job difficult, because our work is to bring down electricity rates.”

Nevertheless, Cusi qualified that “I am looking at it from the DOE’s point of view, but the lawmakers must have been looking at it from a bigger picture for our country.”