Data from the Department of Energy (DOE) show that the price of unleaded gasoline in the local market of P32.93 per liter compares favorably to P93.81 per liter in Hong Kong and P36.25 per liter in Thailand. For diesel, the retail price in the country is P30.95 per liter against P58.31 in Hong Kong and P31.95 in Thailand.
ASEAN countries are expected to further increase oil prices as their respective governments recently lifted oil subsidies to their domestic petroleum sectors.
Prior to the lifting of subsidies, Indonesia was spending $7 billion yearly, Thailand, $1.5 billion and Malaysia, $1.4 billion to shield the public from surges in world oil prices.
Despite pressures to restore the Oil Price Stabilization Fund in the Philippines, the DOE said this will no longer be an option.
"We cannot afford any form of subsidy. But we have to drastically reduce our consumption of imported oil in a regime of extraordinary high oil prices to cushion its impact on the economy and to protect our foreign exchange reserves," Energy Secretary Raphael P.M. Lotilla pointed out.
Notwithstanding the government policy not to provide subsidy to stabilize oil prices, the DOE’s monitoring shows that despite the escalating prices in the world market, local retail prices increased relatively lower.
Pump prices of unleaded gasoline and diesel rose by only 18 percent and 33 percent, respectively, from their December 2004 levels compared to the 61 percent and 42- percent increase in their prices in the international market for the same period.
"While there is a wide sentiment among analysts that we have not seen the worst in prices and that volatility will continue to linger, prices in the local market remain one of the lowest compared with that of other countries," Lotilla stressed.
One of the ways to cut consumption is to introduce the widespread development and utilization of alternative fuels for the transport sector which uses about 46 to 58 percent of the country’s demand for imported oil.
Independent players Seaoil Petroleum, Flying V and Eastern Petroleum have started selling at the pump pre-blended ethanol gasoline which uses 10-percent bioethanol made from sugar. Consumers are also expected to benefit from this as pre-blend ethanol gasoline is offered 65 to 71 centavos per liter cheaper than regular unleaded gasoline.
Another alternative transport fuel already in the local market is pre-blended coco methyl ester (CME) diesel which is produced from coconut.
Estimates show that mandating the use of five-percent blend of bioethanol will displace 236 million liters of gasoline or equivalent to $129 million of foreign exchange savings while 10- percent blend will result in potential gasoline displacement of 536 million liters equivalent to $294 million of forex savings.
For diesel, estimates show that the country is expected to earn forex savings of about P1.2 billion from one- percent blend of CME on diesel.