Regime of declining oil prices to end soon

MANILA, Philippines - The decline in oil prices may soon come to an end, depending on whether attacks on Libya’s oil terminals would continue, but in any case, the initial spike may be negligible, an oil industry executive said.

On Thursday, wire reports showed that Islamists killed at least 22 soldiers to seize some of Libya’s main oil facilities as fighting in the oil-region between government forces and militias erupted.

Fernando Martinez, president of Eastern Petroleum Corp. and the Independent Philippine Petroleum Companies Association (IPPCA) said there may be a spike but whether or not this would be sustained is still anybody’s guess.

“Prices will go up but negligible,” Martinez said.

He said prices may go up by only P0.35 per liter while diesel prices will go up by P0.05 per liter.

When asked whether prices would start to go up again on a sustained basis, Martinez said: “your guess is as good as mine. Nobody can really tell but at $60 per barrel, it’s still relatively cheap.”

He urged the government to take advantage of lower gasoline prices.

 “The government should seize the opportunity to recoup some savings and put it in much needed infrastructure and mass transit. Other governments such as Indonesia are taking advantage by cutting their subsidies. While we have done away with subsidies after the oil deregulation, we have enormous opportunity to capture the oil savings,” Martinez said.

He earlier proposed a P1 per liter special tax on oil to be used for infrastructure projects.

He said this was done in the late 1980s when the government imposed a P1 per liter levy on gasoline.

However, Martinez said there should be consumer representation in the multi-sectoral group that would administer the fund.

According to the latest report of the Department of Energy (DOE), overall market fundamentals have not changed much with ample supplies.