DOE chief: Damage to oil sites to keep prices high
Filipinos should not expect fuel prices to immediately bounce back to pre-Iran war levels even if the attacks subside, since power assets in the Middle East have sustained “permanent damage,” according to Secretary Sharon Garin of the Department of Energy (DOE).
Even if Iran agrees to fully open the Strait of Hormuz—a critical waterway where about 20 percent of the world’s oil and liquid natural gas supply passes through—there is still “no assurance of the availability of the supply from the Middle East,” Garin said.
“[This is] because most of the structures have been destroyed by the war that is going on,” the energy chief told reporters in a briefing on Tuesday.
Rehabilitating the damaged fuel sites or constructing a new energy network would take “months or even years,” she added.
High dependence
Based on DOE data, up to 98 percent of the country’s crude oil imports come from the Middle East, with the remaining 2 percent sourced from its Asian neighbors.
About 97 percent of the country’s imports of liquid petroleum products—such as diesel, gasoline and kerosene—are from Asian countries. But these suppliers from Asia also depend on crude oil from the Middle East to produce petroleum products.
The Philippines only has one refinery, owned and operated by Petron Corp., which supplies roughly a third of national fuel demand.
“So there has been damage already, and sure enough, the increase has been very quick. In a matter of one month, our price has gone up by more than 100 percent,” she said.
“This is by far the fastest and the highest increase of our oil prices and that’s due to the war in Iran,” Garin added.
Before the war erupted on Feb. 28, diesel was being sold in Metro Manila at only P48 to P73.61 per liter. Pump prices soon surged to as high as P172 a liter.
Gasoline prices, on the other hand, ranged from P50 to P77.03 per liter before the war. They have since climbed to up to P120 per liter.
“I do not expect it to go down as fast as it went up… In fact, it will be way, way slower because the damage goes beyond the war,” Garin said.
Another long wait
Meanwhile, Garin also said Filipinos may have to wait for more than a month before they can feel a slight relief from surging prices if the government decides to suspend or cut the excise on fuel.
“It is being charged upon entry into the country, meaning upon importation. So everything that we are selling now that is within the country, which is 50 days of supply, excise tax has been paid already for that,” she said.
The next importations, she said, may come in the middle or latter part of April.
If the fuel excise is suspended, diesel prices will be slashed by P6 per liter, while P10 per liter will be trimmed from gasoline prices.
Garin also said the government and local fuel retailers continue to secure deals for additional supply. The government earlier allotted P20 billion to acquire two million barrels of diesel, enough for 10 days of consumption.
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