DOE: Tumbling global oil prices to cushion fuel tax hike’s impact
MANILA, Philippines — The new round of fuel tax hike that took effect last January 1 should not put too much pressure on Filipino consumers’ budgets, the Department of Energy said Thursday, citing steep declines in world oil prices that translate to lower local pump prices.
The government has decided to proceed with the second tranche of its fuel excise tax adjustment in 2019, after the country’s economic managers called off their previous plan to suspend the implementation of additional P2.00 levy on both gasoline and diesel.
In a press conference, DOE spokesperson Wimpy Fuentebella said the recent drop in oil prices in the world market would cushion the impact of petroleum tax hike on households.
Fuentebella also assured the public that the government is closely monitoring factors that can stoke a sudden spike in oil prices like a currency slump and weather disturbances.
“So medyo malaki yung reduction in the past three months kaya hindi masyadong mararamdaman ng ating mga kababayan yung impact ng excise taxes (So the oil price reductions in the past three months were huge, thus our countrymen will hardly feel the impact of excise taxes),” Fuentebella said.
Oil prices have shed since October last year due to fears of oversupply and weak global demand.
Domestic pump prices have tracked the freefall in Dubai oil prices — Asia’s benchmark — with gasoline prices now below levels seen before the first tranche of petroleum tax increases was implemented in January 2018, according to ING Bank in Manila.
But some analysts said the oil excise tax increases this year could lead to broad-based price increases similar to the first tranche introduced in January 2018.
Meanwhile, oil ministers from leading OPEC nations said last December they expect prices will arrest their recent slide and rebalance early 2019, when a deal on new production cuts takes effect.
“Surprise OPEC supply cuts could cause crude oil’s recent plunge to reverse,” ING Bank said.
The Bangko Sentral ng Pilipinas expects inflation to settle within 5.2-6 percent range in December. If the low-end of the BSP’s forecast range is realized, it would fall below the 6 percent print chalked up in November, which saw inflation ease for the first time in 2018 to post the slowest rate in four months. — Ian Nicolas Cigaral with a report from AFP
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