WHAT’S CAUSING THE HIGH OIL PRICES?

Since the Philippines is a net importer of oil, any increases in international oil prices will raise local pump
costs. A weak peso, which may make imports more expensive, is lifting up fuel prices.

As the world economy recovers from tight lockdowns due to the widespread of Covid-19 virus, demand
for oil has finally restored. According to latest DOE forecasts, global oil consumption in the fourth quarter
might reach 103 million barrels of crude oil per day (mbpd) in preparation of the cold weather, when
electricity generation is high for heating. Unfortunately, current supply is just around 103.22 mbpd.

GOVERNMENT INTERVENTION

As an urgent response, the government would invest P1 billion to offer gasoline subsidies to
Public Utility Vehicle (PUV) drivers who are suffering from high motor oil costs. The funds will be
distributed to the Land Transportation Franchising and Regulatory Board (LTFRB), which will
provide monetary assistance to about 178,000 PUV drivers for the remainder of the year.

The government has also requested that oil firms offer discounts to PUV drivers. To avoid a
price rise, transportation officials increased the authorized passenger capacity of PUVs from
50% to 70%.

At the same time, the Department of Energy said that it had urged Congress to alter the Ramos-
era Oil Deregulation Act to allow for the unbundling of retail petroleum product pricing. The
revisions would also give the Department of Energy the authority to suspend oil excise duties
when world prices are high. This concept is viewed as a long-term solution to the problem, but it
would have to go through a laborious and time-consuming legislative procedure.