Diesel may hit P90 per liter next week

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MANILA, Philippines — Diesel prices could approach the P90-per-liter mark next week, with fuel costs expected to surge in double digits amid escalating tensions in the Middle East.

After four days of volatile trading on the Mean of Platts Singapore, an industry source told The STAR yesterday that diesel prices could increase by nearly P20 per liter.

A potential price hike of close to P10 per liter, meanwhile, is seen for gasoline.

However, the final price adjustments could still increase further with one trading day left.

After a second meeting with industry players, Energy Secretary Sharon Garin said oil firms are “amenable” to staggering next week’s price increases.

Global prices continue to rise amid supply disruptions triggered by the Middle East conflict, which led to the closure of the Strait of Hormuz, a key trade route for 20 percent of the world’s oil and gas.

The geopolitical tensions have also prompted China to halt new contracts for gasoline and diesel exports, adding to mounting fears of supply constraints.

“Asian refiners are struggling to secure prompt replacement crude cargoes, with some Chinese refiners already cutting runs and suspending fuel exports, resulting in a reduced available supply in the region,” Jetti Petroleum president Leo Bellas told reporters yesterday.

Bellas said disruptions in Middle East crude oil have severely strained distillate supplies, making diesel more sensitive to the conflict than gasoline.

“Boosting sentiment is the growing worries about how long shipping channels from the Middle East will remain clogged, especially as storage tanks across the Middle East are rapidly filling up, forcing producers to cut output if they can’t resume exports soon,” he added.

President Marcos has said the country’s current stockpiles can last about 50 days for diesel, gasoline and fuel oil; 67 days for kerosene and 29 days for liquefied petroleum gas.

To strengthen supply buffers, the government plans to procure at least one million barrels of diesel, enough to cover an additional five days of demand.

The Department of Energy (DOE), meanwhile, has stepped up monitoring against profiteering and hoarding, warning that such acts of price manipulation are illegal and punishable by fines and imprisonment.

The DOE is working closely with the Department of the Interior and Local Government and the Philippine National Police to ensure swift action against violators.

In Metro Manila, standard diesel currently sells for between P49 and P66.59 per liter, while premium diesel ranges from P56.80 to P74.81 per liter.

Possible P90 a liter for diesel

The DOE yesterday told the Senate foreign relations committee that pump prices of diesel could hit P80-P90 per liter.

But this depends on the move of oil companies whether to implement a one-time big-time oil price hike or to do it on a staggered basis, meaning a gradual hike, according to DOE-Oil Industry Management Bureau director Rino Abad.

“That’s the estimate. But of course, we’re waiting for the actual implementation by the oil companies. For the longest time, we emphasized that we did this before, a staggered price adjustment by the oil companies,” Abad said in Filipino.

He said pump prices for both gasoline and diesel breached the P80 per liter level in 2022, the last military conflict among the three countries US, Israel and Iran.

“So it won’t take much to reach P90 (per liter of diesel). Because this is much worse than (that),” Abad said of the latest conflict.

When foreign relations committee chair Sen. Erwin Tulfo asked if the pump price for diesel could reach P90 per liter next week, Abad said that is only possible if companies implement it immediately, or on a “one-time bagsakan (simultaneous)” basis.

But the increase may not be that big if companies implement it on a staggered basis.

While Abad could not be sure if the increase is expected next week or anytime this month, he said that after four days of trading, there’s a high chance that pump price of diesel is “estimated” to reach P79 to P80.

As for gasoline, the pump price could be around P64 per liter, Abad said, adding that it could even go up to P80 per liter.

PUV fuel subsidy

Land Transportation Franchising and Regulatory Board (LTFRB) chairman Vigor Mendoza II said they are waiting for the “go signal” from higher authorities to distribute fuel subsidies to public utility vehicle operators.

Fuel subsidies worth P2.5 billion will be given to PUV operators when fuel prices reach $80 per barrel.

“Our work is to make sure that the distribution system – the moment the funds are available – will be done swiftly and efficiently with no one left behind,” Mendoza told reporters.

“We are still ironing out some things. We have some operators who don’t have cards. We are coordinating with Landbank that they will not run out of cards for our operators,” he added.

The LTFRB has yet to determine the amount of the subsidy but they gave assurance that it will last for at least a month.

Mendoza earlier said they are open to a provisional fare hike if diesel hits P60 per liter.

This is different from the proposed fare hikes of PUV operators that they still need to consult with other agencies.

There is no certainty when they will arrive at a decision, given the ongoing rise of fuel prices.

Oil inventory

The Bureau of Customs (BOC) has ordered ports to tighten oversight of oil imports and inventory levels, requiring regular reports amid Middle East tensions that threaten supply lines.

In a statement, Customs Commissioner Ariel Nepomuceno has ordered all ports to step up monitoring of oil imports and gauge the sufficiency of the existing fuel supply entering the country.

Under this directive, all district ports are required to submit regular reports on oil importations in their respective areas of jurisdiction, the BOC said.

Hoarding

Amid the projected increase in fuel prices, the DOE warned gasoline stations against hoarding and profiteering.

Energy Secretary Garin on Friday said gas stations could only increase prices of fuel – diesel, gasoline or kerosene – once a week, every Tuesday, unless the agency allows it to be more.

She said any abuse of the situation should be reported to their office.

“I will have our field office investigate it. We would check gasoline stations if how many times did they increase their fuel for this week because that’s not allowed,” Garin said.

She urged the public to send them pictures and receipts to support their claim.

“We will bring the police and the DOE to reprimand and file cases against them,” Garin said.

She said she met with the DOE teams to strictly police gas stations against profiteers.

Jeep drivers may stay home

Manibela chairman Mar Valbuena said a gas station chain – Oiland – is already selling diesel at P90 a liter.

Valbuena told “Storycon” on One News yesterday that Manibela is considering possible legal moves against Oiland.

He said that because of the surging diesel prices, some of their members may stop plying their routes until the fuel situation stabilizes.

Jeepney operators have already lowered the boundaries to give drivers a better take-home pay, he said.

Valbuena urged Congress to speed up the passage of a law authorizing President Marcos to suspend the fuel excise tax. He said the group will also welcome fuel subsidies.

Meanwhile, former Bayan Muna representative Carlos Zarate warned yesterday that the Philippines faces an inflation explosion in the coming months if the Marcos administration fails to address the oil price crisis immediately and decisively. — Marc Jayson Cayabyab, Josiah Antonio, Aubrey Rose Inosante, Bella Cariaso, Jennifer Rendon, Jose Rodel Clapano