September 23, 2019 By Lenie Lectura & Butch Fernandez
OIL companies announced
on Sunday the biggest fuel price hikes for the year, and the first adjustment
to input the impact on global markets of the drone attacks on Saudi Arabian oil
facilities.
The oilprice hike
announcements came on the eve of a Senate inquiry to review, with key energy
players, the options to mitigate the impact of the Saudi Aramco attacks on the
oil supply-price outlook of the Philippines, which imports almost its entire
crude oil requirements.
Announcements of the
new price hikes‚ a whopping P2.35 per liter of gasoline, P1.80 for diesel and
P1.75 for kerosene, to take effect 6 a.m. of Tuesday—were made by Pilipinas
Shell and PetroGazz, with other oil firms expected to follow suit.
The oil price increase
reflects movements in the world oil market. One factor that led to this week’s
price adjustment was the September 14 drone attack on Saudi Aramco’s
facilities.
Sen. Sherwin
Gatchalian, energy committee chairman, confirmed over the weekend that
Resolution 139 mandated the committee to conduct an inquiry, in aid of
legislation, on the short, medium, and long term plans of the Department of
Energy (DOE) “to achieve energy security to mitigate the adverse repercussions
of supply shocks on Philippine oil supply and prices” following the attack.
Invited to testify on
Monday were officials of the DOE and its Oil Industry Management Bureau
(DOE-OIMB), the Energy Regulatory Commission (ERC), Philippine National Oil Co.
(PNOC), National Power Corp. (Napocor), National Grid Corp. of the Philippines
(NGCP), Phil. Competition Commission (PCC), Department of Transportation (DOTr),
Department of Trade and Industry (DTI), among others.
Invited as observers
were: Aboitiz Power Corp., Team Energy, SEM-Calaca Power Corp., AES Power
Corp., Phinma Energy, Millennium Energy, Vivant Corp, UniOil Petroleum, Phoenix
Petroleum, Eastern Petroleum Corp., SeaOil Phils., PTT Philippines Corp., Jetti
Petroleum Inc., Flying V Oil, Total Phils. Isla LPG Corp. and South Pacific
Inc.
Stable supply
The DOE assured the
public last week that the country has stable fuel supply. However, it was
uncertain on how pump prices will behave after the drone attacks.
“There is no supply
problem. If there are concerns on supply, they should not be worried,” said
Energy Secretary Alfonso Cusi, adding that his office can at least assure the
public that “the inventory we have is sufficient to keep the economy running.”
The DOE reminded the
oil firms to strictly implement the minimum inventory requirement (MIR),
equivalent to stocks of 30 days for oil refiners, 15 days for bulk marketers,
and seven days for liquefied petroleum gas players.
In a meeting with the
oil firms, the DOE proposed to increase the MIR to 60 days, but the oil
representatives said the immediate creation of new infrastructure along with
the added logistical demand may prove costly and detrimental to the current
operations.
The DOE also proposed
staggered oil price hikes. The oil players took note of this proposal and said
that based on indicative figures in the world oil market, present pump prices
remain lower than 2018 figures even with the 2019 tranche of the TRAIN law in
effect, and that the country as a whole is affected by world oil price
volatility.
The DOE also raised
possible contingency measures, which includes the preparation of oil supply
replacement, and a possible increase in the biofuel blends as an option to
mitigate potential supply shortages.
In filing the
resolution for a Senate inquiry into the Saudi drone attacks fallout,
Gatchalian said on Friday the “DOE, as the primary agency in charge of planning
and implementation of comprehensive programs for the supply of energy, needs to
inform the Filipino public about the effects of the Saudi Aramco attack on oil
supply and prices in the Philippines.”
He wants the DOE to
state “its short- and medium-term plans and strategies to ensure continuous and
sufficient supply and reasonable prices amid strains in the Middle East, as
well as its long-term plans and stra-tegies to achieve energy security in order
to prevent vulnerability to supply shocks and insulate consumers from
unexpected shortages and sharp price increases.”
According to
Gatchalian, as of June 2019, almost all, or 99.9 percent of crude oil in the
Philippines is imported, with 12 percent of that coming from Saudi Arabia.
Sixty-eight percent of
petroleum supply in the Philippines is consumed by the transportation sector,
while power generation uses 5 percent. At least 11 percent is for commercial
use, 5 percent for manufacturing, and the remaining 11 percent is used by other
industries including agriculture, mining, and construction, the Energy panel
chief said.
Consumers: Inventory is pre-Saudi
Meanwhile, Laban
Konsyumer Inc. (LKI) said the DOE should determine that existing inventory
products are priced at their pre-Saudi oil incident.
“The oil industry must
not take advantage of a force majeure situation at the expense of the
consumers.
“The DOE is clothed
with powers under the oil deregulation law to take affirmative action for the
interest of consumers,” said LKI President Victor Dimagiba.
The meeting with the
oil industry players was presided by Undersecretary Donato D. Marcos and
cochaired by OIMB Assistant Director Rodela I. Romero. The representatives from
the office of Gatchalian, the Philippine Institute of Petroleum (PIP), and
other oil industry representatives were in attendance.
“The DOE is working
24/7 to address these oil-related concerns brought about by the attacks in one
of our biggest oil sources in the Middle East. We are reminding everyone to
practice energy-efficiency measures like carpooling and the use of public transport
so that we may all contribute to help the nation and the environment” Cusi
said.
Task force
The DOE also met with
the proposed members of the Oil Contingency Task Force (OCTF) to finalize the working
draft establishing the interagency working group that implements the country’s
contingency strategies.
The OCTF is activated
in preparation for natural or man-made disasters to address the country’s
immediate oil supply concerns and, in this case, the impact of the geopolitical
and disaster-related events that may cause supply disruptions or sharp
volatility in the world oil prices.
“We realize the
importance of addressing issues beforehand so that the government may have
contingency measures to sustain the country’s economic growth and provide basic
services to the people. The activation of the OCTF is vital to our resiliency
because we are currently dependent on oil imports,” said Cusi.
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