DOE expects oil prices to soften by Q2

The Department of Energy (DOE) has expressed optimism that the prevailing high level of oil prices will be temporary and should expectedly soften by second quarter.

In a press conference, Energy Secretary Vincent S. Perez attributed the DOE’s optimism to the sustained increase in the production of non-Organization of Petroleum Exporting Countries (OPEC) members like Russia and Mexico.

Perez added that another major oil producer Iraq, is seen to increase its production and enter the market during this time.

OPEC will meet and review on Feb. 10 the global market conditions and decide on production quota. Perez said the result of the review may affect world oil prices.

But Perez assured that the country‚s oil inventory is sufficient to last until April 2004. As of Jan. 5, the country has 53 days of inventory. Of this, the in-country inventory is at 36 days and the rest are in transit. An expected six million barrels of shipment are coming into the country in February.

Energy Undersecretary J. V. Emmanuel de Dios, on the other hand, said there are now 104 retail stations offering price discounts to jeepney and bus operators.

De Dios said the DOE is trying to convince the oil companies to continue to give the discount to be able to maintain the P15.50 per liter threshold set by the transport group on the price of diesel.

The transport sector groups have warned that they will be asking for a fare hike once this limit is breached.

According to de Dios, they are also convincing the small oil players to avail of the loan fund from the Philippine Amusement Gaming Corp. (Pagcor) to be able to continue to give the discounts to the transport sector.

The energy official said they are talking with two associations that will be availing of the fund.

Perez, meanwhile, said he is contemplating on writing a "protest letter" to the OPEC leaders for not being true to their commitment.

The energy head said this was due to the latest OPEC decision to disregard its own self-imposed rule of increasing oil production when the OPEC price basket exceeds $28 a barrel for more than 20 consecutive days.

"The excessively high oil prices being maintained by OPEC are hampering the sustainability of economic recovery of oil consuming countries such as the Philippines. While the world has tolerated a crude oil price range of $22 to $28 a barrel, sustaining oil prices above this price will eventually work against OPEC," Perez said.

"If OPEC continues to maintain artificially high crude prices, the Philippines will aggressively pursue energy conservation, alternative fuels and exploration and development of its indigenous petroleum resources," he added

Despite the increase in world crude prices that is affecting the local oil market, Perez said the Philippines maintains lower oil prices compared to other countries in the Asia Pacific.

He said the pump price for diesel in the Philippines is at P17.03 compared to the equevalent of P20.80 in Thailand, Cambodia (P23.41); HongKong (P43.43); Singapore (P22.99); Australia (P39.90) and New Zealand (P23.90).