Pricing problems of Oil inflation rate

in the

Philippines
2019-2021

MANILA, Philippines — Rising global oil prices are fast becoming a

problem in the Philippines as they continue to stoke inflation in an
economy that is just starting to get its groove back after a pandemic-
led collapse.

STATISTICAL REPORT

50

40

30

20

10

0
Item 1 Item 2 Item 3 Item 4 Item 5

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.
- We are not an oil-producing country. Because of the increasing crude oil prices, even alternative fuel like coal, prices in China also
surged. Most of our power plants are using coal so the acquisition costs could also increase. We have to guard the prices of
electricity as well
- unexpected supply disruption, such as a hurricane in the Gulf or military conflict in the Middle East, can send prices even
higher, especially if oil refineries (either locally or globally) are damaged and have to halt production.

THE EFFECTS OF HIGH OIL PRICE

- Any increase in crude prices oil could affect goods and services in the Philippines through transport costs and other energy-
related items in the consumer price index
- Consumers Have Less Discretionary Income
When you pay more for a necessity such as gas, you have less for discretionary spending on things such as dining out or buying
clothes
- Travel Is More Expensive
When fuel costs go up – especially when they go up rapidly – airlines often add extra fees to compensate. They might also cut
service, offering fewer flights as a way to save money. Higher ticket prices make business travel, family trips, and vacations
more expensive

Binasuan This is a popular folk dance that

originated in Bayambang,

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.