IT IS painful to compare the Philippines with other countries in terms of preparedness for a sudden decline in oil supply and the consequences of big-time fuel price increases.
Foreign leaders talked of not having to worry about a reduction in oil supply because their countries are not reliant on non-renewable sources. President Donald Trump spoke in his usual cocky manner about the United States being “locked and loaded” to face head-on the consequences of drone attacks on Saudi Arabia’s largest oil processing facility. To keep fuel prices at current levels and have the market well supplied, Trump ordered the release of supply from their fuel reserve.
In the Philippines, consumers are left with no recourse but to cope with rising prices as dictated by fuel companies, without much government intervention to be heard or seen. Fuel prices on Tuesday, Sept. 17, 2019, rose by as much as P1.50 per liter. Another increase this Tuesday, Sept. 24, will be by at most P2.35 per liter. Warnings have been made about more increases to follow and fuel rates impacting on the prices of basic commodities and utilities like water and electricity.
Compared to several other countries, including neighbors in Southeast Asia, the Philippines is more vulnerable to fuel price increases because of lack of alternatives and, to an extent, the imposition of taxes.
Among the measures presented to address this abnormal fuel situation was the suspension of the excise tax on fuel products under Republic Act 10963 or the Tax Reform for Acceleration and Inclusion Act or Train law. Basing it on what transpired in the past, when President Rodrigo Duterte proceeded to implement the increase in excise tax on Jan. 1, 2019 despite calls to postpone it, there is little or no chance for a suspension.
There are other measures to be resorted to outside of the excise tax suspension. Energy regulators should verify if the price increases by oil companies are appropriate. If the current stock of fuel companies was purchased before the Saudi crisis, there should be no price adjustment.
Fuel companies have assured consumers of adequate supply but they failed to explain why there was still the need to adjust prices big-time. What happened to the buffer stock that fuel companies were supposed to keep? The buffer is meant to prepare for unplanned inventory shortages, such as the situation now.
International players have said the disruption in Saudi oil production is temporary. Urgent repairs are being done to resume fuel processing and normalize world supply. Any local price adjustment should reflect that temporary nature of the emergency. When the emergency ends, prices should roll back to pre-Saudi attack levels.
Economic managers have said local inflation could take a hit from the fuel price increases. This is where government regulators have to come in to ensure consumers are protected. Control prices of basic commodities and utilities, and make sure no one is riding on the fuel supply disruption to jack up prices.