Brace for another big fuel price hike as diesel, gasoline costs surge

National

ANOTHER painful week awaits motorists, as fuel prices are expected to surge by over P6 per liter amid escalating fears of supply disruptions in key global oil shipping routes.

Jetti Petroleum president Leo Bellas said diesel prices could increase by P6 to P6.50 per liter, while gasoline prices may climb by P5.50 to P6 per liter on July 28.

The estimate was based on the four-day average movement of the foreign exchange rate and the Mean of Platts Singapore, the benchmark used for refined petroleum products in the Asia-Pacific region.

While one trading day remains before the final adjustment is determined, Bellas said prices may still move slightly higher or lower, although a rollback is considered highly unlikely.

According to Bellas, global oil prices have surged amid fears of supply disruptions following the closure of the Strait of Hormuz, a strategic shipping lane that handles about 20 percent of the world’s oil and gas supplies.

Concerns have also expanded beyond the Persian Gulf, with heightened security risks in the Bab el-Mandeb Strait fueling worries over additional disruptions along major maritime trade routes.

Although less critical than the Strait of Hormuz, the Bab el-Mandeb serves as an important passage linking the Red Sea, Gulf of Aden and the Indian Ocean.

“Refinery disruptions and further constraints on Middle Eastern and Russian supply are keeping middle distillate supplies tight and prices elevated,” Bellas said in a Philstar report.

As motorists brace for another round of higher fuel costs, economic managers said they are prepared to recommend additional relief measures if global crude prices remain elevated.

Finance Secretary Frederick Go said the Development Budget Coordination Committee could again propose suspending excise taxes on kerosene and liquefied petroleum gas (LPG) if Dubai crude averages more than $80 per barrel for 30 straight days, as provided under existing law.

“If the price of Dubai Crude exceeds $80 for a period of 30 days, then, if you ask me, it’s very likely we will recommend a similar suspension on LPG and kerosene,” he said in the same article.

The Marcos administration had previously ended the temporary suspension of excise taxes on selected fuel products after the average price of Dubai crude declined to $79.45 per barrel between June 1 and June 30.

Go said any future suspension would likely remain limited to kerosene and LPG. He explained that economic managers had earlier concluded that removing excise taxes on diesel and gasoline would offer little benefit to consumers because any reduction in pump prices would be minimal and largely offset by prevailing market conditions.

The Department of Energy (DOE) has also introduced measures aimed at cushioning the impact of rising fuel prices on consumers and public utility vehicle (PUV) drivers.

Energy Secretary Sharon Garin also renewed her call for Congress to revisit the Oil Deregulation Law, saying the country’s downstream oil industry operates under a market-driven system established by the law. She said any change in the government’s direction on regulating the sector would require legislative action.

This week, the DOE reinstated stricter fuel pricing rules that impose caps on price increases while requiring minimum rollbacks.

Under the policy, diesel price increases are limited to P10.68 per liter, while gasoline adjustments are capped at P3.65 per liter and kerosene at P11.77 per liter.

With fuel prices expected to rise sharply, Garin urged oil companies to stagger their adjustments to help reduce the immediate burden on motorists.(MyTVCebu)