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Government must prepare for $100 global oil shock

PASAY CITY, Philippines – A gasoline station crew attends to a customer in Pasay City, 17 May 2018. Senator Win Gatchalian noted an “unusually accelerated pricing track” of petroleum products with a gasoline price increase of ₱8.07 per liter, and a diesel price increase of ₱8.95 per liter for the first five months of this year. Photo by Mark Cayabyab/OS WIN GATCHALIAN

Senator Win Gatchalian on Monday urged the government to prepare ahead in the event that crude prices will reach the USD $100 per barrel threshold in the global market.

“Filipinos are really starting to feel the negative effects of rapidly rising global oil prices. This should send a clear signal to our government that it is time to start preparing for contingencies in case we hit the $100 mark,” said Gatchalian, the chair of the Senate Committee on Energy. Oil prices are already at USD $79 per barrel, the highest mark since November 2014.

Last week, Patrick Pouyanne, the chief executive officer of French oil company Total SA, warned that oil prices could hit USD $100 per barrel in the coming months.

The lawmaker urges the Department of Energy (DOE) to accurately forecast the expected price of crude oil over the next six months and lead the preparation of strategies that would minimize the impact of surging prices on public utility drivers and private consumers.

“DOE must ensure that it provides accurate estimates, so the government may be guided in crafting both immediate and long-term ways to insulate the country from shocks in the global oil market,” he said.

Prices of petroleum products are expected to increase this week by up to Php 1.60 pesos / liter for gasoline and Php 1.10 pesos / liter for diesel.

The senator observed the “unusually accelerated pricing track” of petroleum products is disrupting public consumption. From January to May 2018, gasoline prices increased PHP 8.07 pesos per liter, while diesel is up PHP 8.95 pesos per liter.

He added that the government could explore reviving and expanding the Pantawid Pasada or the Public Transport Assistance Program, which was first rolled out in 2011, as an immediate mitigating program to shield the vulnerable sectors from the impact oil price hikes. Under the program, holders of legitimate PUV franchise holders were given cash cards worth PHP 1,050 to buy fuel from accredited gasoline stations.