With Middle East oil futures seen easing, govt. eyes price unbundling for transparency

 

By Rose de la Cruz

With the futures trading of oil seen easing to $75 per barrel in June, then sliding to $69 for June 2019 and further to $65 by December 2019, government would have to initiate a national stockpiling program for crude to ensure the country against wild fluctuations of this vital commodity in the months ahead.

 

Some congressmen are even asking the Department of Energy to also make public the unbundling of oil prices similar to the unbundling of electricity charges.

 

Rep. Ciriaco Calalang, Kabayan partylist, said the earlier-feared $80 per barrel level would likely be avoided because the futures prices show crude oil peaking at close to $75 in June 2018, then sliding toward $69 for June 2019, and further slipping to about $65 for December 2019.

 

It looks like Dubai crude oil will stay above $70 until May or June next year. Our country started feeling the pain as crude prices approached $70. Considering this, safety nets must still be activated and deployed, he said.

 

For June 2022, when the term of President Rodrigo Roa Duterte ends, the Dubai crude futures price is at about $54.

 

Calalang said the country needs to overcome June 2018 because of the rising crude prices in the world market because of increased oil demand from the summer vacation travel and transport season which begins in June for many parts of the world.

 

Latest data, he said showed that Dubai oil prices would not hit $80 per barrel and because of this, there is no need to suspend the TRAIN excise tax on imported oil and fuel products.

 

Considering these latest figures, the Department of Finance would not have reason to suspend the excise tax on imported oil and fuel as it is authorized to do in the TRAIN Law.

 

Unless some new events and factors emerge over the next months to upset the Dubai crude oil forecasts, we now see a gradual easing of inflation pressures on the Philippine economy.

 

A lot also depends on how the OPEC countries behave in the oil market.https://goo.gl/zRgyGu

 

We now have the opportunity to build our own national strategic fuel reserves. I had suggested this before.

 

When Dubai crude returns to below $60 per barrel, that would be the opportune time to stock up on petroleum and petroleum products. 

 

Unbundling

 

Rep. Carlos Roman Uybarreta, 1st Consumer Alliance for Rural Energy, said he welcomes the statement by Energy Secretary Alfonso Cusi that the DOE will come out with a policy on unbundling petroleum product prices. “We need to unbundle the prices. It has to happen," Cusi was quoted as saying in a DOE report.

 

As Vice Chair of the House Committee on Energy, I will work with the DOE on this. Executive branch decisions on the unbundling of fuel prices would be good. However, for fuel price transparency to truly take hold and last, the unbundling must be firmly established by law, he said.

 

Filipinos must know why the fuel they buy costs so much.

 

Uybarreta said that with the unbundling of fuel prices, point of sale purchases of gasoline, diesel, kerosene, and LPG would have to show the breakdowns of the costing of the fuel, in somewhat the same way as the breakdown of our electricity bills.

 

The receipt of fuel bought at the gas stations must show crude oil cost, when it was bought, and the price components because of importation excise tax paid, foreign exchange currency adjustments, refining costs, and distribution costs. Making this happen will need some doing in terms of billing technology execution, but it can be done, he added.

 

Fuel price transparency is an absolute necessity whether fuel prices are high or low because full public disclosure, similar to what is happening in the Philippine stock exchange and in the unbundled electricity rates, is what ought to happen with fuels.

 

By fuels, I mean not just the liquid fuels but coal as well. Coal, because it is a fuel for some of our power plants.

 

Implementation of the unbundling of fuel prices might be more difficult than our country's experience with the unbundling of electricity rates, partly because of the necessity of having an online database of all the fuel prices sold all over the country and relevant data on the cost breakdown of all fuel sold from the time of importation to point of sale.

 

For even greater transparency, the general public must be able to view all that data using their own desktop computers and mobile devices. The data and the database must be open to regular and surprise spot audits by external private auditors and the Commission on Audit.

 

That is the level of transparency the Filipino people deserve.

 

Fuel price transparency policies and processes have been in place in other countries for years now. It has taken so long for this to come to our shores. It is long overdue. The time for it has finally come.

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