DOE sustains zero tariff on oil imports

MANILA, Philippines – The Department of Energy (DOE) yesterday sustained a P1.50 per liter tariff cut on imported petroleum products that would hopefully lessen the number of oil price hikes in the next few weeks.

DOE director Zenaida Monsada earlier said the tariff cut, which will be applied to diesel products, is expected to diminish weekly oil price increases.

In a certification released yesterday, Energy Secretary Angelo Reyes said the DOE duly certifies the implementation of Executive Order No. 691, stating that “all import entries corresponding to articles listed in Annex A thereof filed and received by the Bureau of Customs shall be levied zero-percent rate effective July 1, 2008.”

Reyes said the tax cut would temporarily modify the rates of import duty on crude petroleum oil and refined petroleum products under Section 104 of the Tariff and Customers Code of 1978 (Presidential Decree No. 1464) as amended for the period of June 1 to 15, 2008.

The average price of Dubai crude and diesel in the international market were above $103.50 per barrel and $117 per barrel, respectively, during the period June 1 to 15, 2008.

With the continuing rise in global crude prices, oil players may likely be adjusting their prices upward until August this year as they need to recover P6 per liter cost from consumers.

Oil firms have so far raised their gasoline prices by P15 per liter, diesel by P14 per liter, and LPG P2.83 per kilo since the start of the year.

“The weekly increases will continue up to August for the oil companies to get viable operations,” industry sources said.

The source added that oil companies would likely retain the level of increase at P1.50 per liter every weekend.

Oil importers are closely monitoring the price of petroleum products in the region to determine how long they would adjust their prices.

The Mean of Platts Singapore (MOPS) for gasoline, the benchmark for pricing used by oil importers, went up by $9 per barrel as of end June to $140.30 per barrel from $131.13 per barrel in May.

MOPS for diesel increased by $8 per barrel to $169.36 from $161.22 per barrel.

With this scenario, diesel, used mostly by the public transport sector, will likely go up to a high of P58.97 per liter.

Dubai crude, the benchmark of the oil refiners Petron Corp. and Pilipinas Shell Petroleum Corp., also soared by $8 per barrel to $127.82 per barrel from $119.50 a month ago.

International contract price of LPG or cooking gas would reach $912.50 per metric ton from $855.50 in May.

The LPG Marketers Association has decided to absorb the increase of P1.50 per kilogram.

Reyes had warned the LPGMA for not staggering the price increases for cooking gas.

The DOE will meet with oil industry stakeholders today at its head office in Fort Bonifacio to give an update on prices.

Sources said the DOE would allow the oil firms to explain how the so-called under-recoveries are arrived at.

Current prices of unleaded gasoline is P58.26 to P60.98 per liter, diesel P51 to P52.97 per liter, and LPG P600 to P671.50 per 11-kg tank.  – Donabelle Gatdula