House leader sees oil price rollbacks for the rest of 2022

September 5, 2022 Ryan Ponce Pacpaco 368 views

Gov’t must focus on agri, cushion impact of inflation

A HOUSE leader has predicted “a rollback or net reduction in prices every month for the rest of the year for oil prices.”

Albay Representative Joey Sarte Salceda, chairman of the House Committee on Ways and Means, said, “the supply deficit of global oil is narrowing, and supply is increasing at a faster rate than demand.”

Salceda thus urged the government “to focus its efforts on agriculture, because there will still be some second-round effects on food prices, as agri input prices are still high although declining.”

“The Filipino people, who are net buyers of oil from the world market, can expect some slight to moderate relief on oil prices as global oil supply-demand imbalance appears to be easing. July oil supply deficit narrowed to around 600,000 stock tank barrels, the lowest for the whole of 2022. Oil supply in July also grew by 0.28%, but demand grew by just 0.07%,” Salceda said.

“With the US Federal Reserve maintaining its policy of gradual rate hikes, and with domestic pressure among US leaders to increase oil supply, as well as global adjustment to a stalemate in Ukraine, I expect net price reductions on oil prices every month for the rest of 2022. Oil futures data appears to say so, as well,” he said.

Salceda, a former investment analyst for global banks, said he expects to see “something similar to the recovery post-Global Financial

“Crisis, when oil prices peaked in April 2011, before settling down by September the same year. I see it as possible that global crude prices could go below USD 80 for the first time by October this year. From there, it will play between 80 and 95 until global tensions ease permanently,” Salceda explained.

“So, we can begin changing our mindset from oil prices to food prices, which is experiencing non-oil threats, such as climate,” he said.

Salceda said the government can instead focus on lower food prices during what the economist calls “a crucial month of September.”

“September will be very critical. Planting season for rice starts. Some milling of sugar is already happening. And [domestic corn] supply is supposed to begin narrowing this month, as planting takes place next month,” Salceda said.

“We need to focus on fertilizer, financial assistance, and irrigation maintenance this month for rice, to ensure that we have a bumper crop. I had a conversation with DA Senior Usec. Ding Panganiban, who is quite confident that a strong domestic harvest for rice this season will help us tide the effects of more expensive rice imports,” Salceda said.

“So that’s what we need to work on: a strong rice crop this planting season. Free fertilizers distributed in a timely manner, and financial assistance to buy even more fertilizers and inputs, will be crucial. And Usec. Panganiban has assured me that these efforts are moving,” he said. “What we do in September 2022 will affect is in food prices in May 2023. So, we better get these next 30 days right.”