Villafuerte questions DOE over fuel reserve plan

September 21, 2023 Ryan Ponce Pacpaco 175 views

CAMARINES Sur Rep. LRay Villafuerte has questioned the Department of Energy (DoE) for “moving at an apparent turtle’s pace” on a two-year-old DOE circular establishing a strategic petroleum reserve program (SPRP) to ease the impact of global oil shocks on the public.

Villafuerte, National Unity Party (NUP) president, said DOE Secretary Raphael Perpetuo Lotilla and other energy officials “should act on the SPRP with urgency, more so at this time when the latest global oil price shock has raised the retail costs of diesel and gasoline for the 10th time in the same number of weeks.”

The congressman took a jab at the DOE following another round of fuel rate adjustments last Tuesday–the 11th time in 11 weeks–amid fears that the price hikes would continue till end-December and that global oil prices could surpass $100 per barrel for the rest of the year.

In fact, following a consultative meeting this week with Speaker Ferdinand Martin G. Romualdez and top executives of oil companies, Villafuerte said DOE officials have said that the weekly gasoline and diesel price hikes for almost three months now are likely to continue until the last quarter of 2023.

Oil companies this week raised pump prices big time by P2.50 per liter for diesel and P2 per liter for gasoline, as the international benchmark Brent crude rose significantly to $93 a barrel from the previous week’s $89s.

Villafuerte noted that the oil price spirals are likely to continue for the rest of the year at the least, in citing a Reuters report that Saudi Arabia plans to continue cutting its supplies to the world market by 1 million barrels until December while Russia similarly eyes its production cutback of 300,000 barrels also until end-2023.

He said that sky-high fuel rates and rising food prices, which are partly a result of the higher transport costs of producers and traders, are mainly responsible for the sticky elevated inflation, which is expected to remain high for the rest of the year.

Last Monday, Speaker Romualdez and other House leaders held a consultative meeting at the Batasan Pambansa complex with top executives of the DOE and of oil companies to come up with what the Speaker called a “win-win solution” for the people and industry players.

“I hope we can work together to help our people,” said Speaker Romualdez during the meeting as he: (1) suggested to oil companies to find ways of cutting their profit margins and (2) bared the House’s readiness to recommend adjustments in oil tax policy to the President as a way to slash gasoline and diesel prices.

“But it seems this SPRP is still moving at an apparent turtle’s pace—if it is moving at all—at the DOE, given that we have heard nothing about the progress of this plan ever since it was formally put in motion exactly two years ago this month,” he added.

Villafuerte, a former governor of Camarines Sur, who now represents its second district, is wondering why Lotilla and the DOE have yet to set this SFRP in motion when two major reasons for the country’s stubbornly elevated inflation are the rising food and transport costs, which, in turn, are partly triggered by the undue spikes in fuel prices in the global market.

The congressman chided Lotilla and DOE after getting hold just recently of a copy of Department Circular No. 2021-09-0028, issued by Cusi on Sept. 16, 2021 establishing the government-run Philippine Crude Oil and/or Finished Petroleum Products and Biofuel Reserve to, in this Department order’s words, “enhance security of fuel supply.”

This proposed facility shall be run by the Philippine National Oil Co. (PNOC), which was created in 1973 to guarantee the adequate supply of oil and oil products, and later, to explore and develop our country’s energy sources.

That this 2021 DOE circular on the SFRP has not progressed as quickly as it should have, given the currently relentless global oil price spirals, can be gleaned from the fact, according to Villafuerte, that energy officials have yet to lobby the 19th Congress at this point to pass a bill setting up such a fuel reserve facility—which was one of the assigned tasks to the DOE under DC No. 2021-09-0028.

“And if the SFRP is not the answer, then our DOE officials must keep the public abreast of whatever proposals they have in mind, if not working on already, to somehow ease the impact of global oil market volatilities on the consumers of an oil importer like the Philippines,” Villafuerte said.

Prior to the Sept. 19 spike in petroleum products, the DOE reported that the year-to-date per-liter adjustments totalled P15.50 for gasoline and P11.10 for diesel.

Assistant Director Rodela Romero of the DOE’s Oil Industry Management Bureau (OIMB) has warned that the oil rate increases might continue until the end of the year, owing to “the tighter supply outlook due to Saudi (Arabia) and Russia’s voluntary production cuts, Libya’s supply disruption due to hurricanes, and further US crude inventory withdrawals.”

Citing forecasts by industry experts, Villafuerte said that aside from the output and export cuts by OPEC member-states and their allies like Russia, the unabated price rally of petroleum products has been traced, too, to rising demand by China and other major economies exhibiting faster post-pandemic economic recovery.

In mid-September, the prevailing pump prices in Metro Manila ranged from P61 to P81.75 per liter of gasoline and P60 to P71.54 for diesel.

Villafuerte explained that the two-year-old DOE circular sought the creation of a fuel reserve facility to “address a severe international supply interruption or to implement the Targeted Fuel Relief Program.”

The DOE circular pointed out that: “The experience of other countries have shown that establishing a SPRP would be effective in helping mitigate risks and addresses the impact of crude oil and finished petroleum products supply disruptions.”