OVER THE past month, we have seen a drop in the number of new COVID-19 cases, a decline in the hospitalization of people with severe or critical ailments brought about by the virus, and arguably the early signs of the revitalization of our economy.
These developments are more than welcome, especially since the country draws closer to the second anniversary that lockdowns were enforced in light of the pandemic. However, it appears parallel problems have emerged to possibly result in even more hardship for our people.
Among them is the skyrocketing price of oil. Brent crude has jumped to $103/barrel, while the benchmark Dubai crude is currently at $92/barrel. These have resulted in corresponding increases in domestic pump prices â with gasoline up by P8.75/liter, diesel by P10.85/liter and kerosene by P9.55/liter since the start of the year.
Ironically, much of these price increases were due to the re-opening of the worldâs economies after a two-year slump. This revival of activity came with a corresponding increase in the demand for oil but unfortunately, supply levels were still low and this exerted upward pressures on prices. Meanwhile, the low supply could be attributed to two years of dampened demand as countries closed their borders, restricted the mobility of its citizens and imposed limitations on the operations of businesses. At one point the price of oil plunged to negative $40/barrel. Of course, the Organization of Petroleum Exporting Countries (OPEC) has already started scaling up its production but it would take some time before we can see a stabilization of supply.
These sharp increases in fuel prices will no doubt have an impact on all of us. Public utility vehicle (PUV) operators and drivers, as well as private motorists have been cringing from the almost weekly increase in pump prices. It has been reported that the price of gasoline in some petrol stations have already hit the P80 per liter mark. For the PUV operators and drivers, this means reduced earnings since they have to pay more for fuel. The same goes for the agriculture and fisheries sector, who need fuel to fire up their equipment and boats. Once their goods are transported to the markets, consumers will also have to pay more because of the mark up in the unit prices due to the higher cost of fuel.
We anticipated these price increases and its domino impacts on the economyâmost especially on specific sectors like agriculture and transportâwhen we were going over the 2022 General Appropriations Act (GAA) last year. This is why we introduced two provisions in the GAA that will hopefully provide the hard-hit sectors with some relief now that the price of fuel is starting to cut into their earnings.
The first is the allocation of P2.5 billion for the provision of financial assistance or fuel vouchers to qualified PUV, taxi, tricycle, and full-time ride-hailing and delivery services drivers nationwide. We also introduced a P500 million allocation for the provision of fuel discounts to farmers and fisherfolk. For both subsidies, the trigger for the release of funds will be when the average price of Dubai Crude based on the Mean of Platts Singapore averages at least $80 per barrel for three months. On top of the P3 billion for the two sectors, the GAA, under unprogrammed appropriations, also has P5 billion for the provision of fuel subsidies. We are also studying more long-term solutions that we can utilize whenever such drastic movements in world oil prices occur. These include the possible suspension of taxes on oil products, a move that some argue will provide immediate relief to consumers. One option will be to limit the suspension to diesel, since this is the product predominantly used by the transport sector, and to LPG and kerosene as the products consumed by households. As in every piece of legislation that that will have an impact on national revenues, we are involving in the discussions the Department of Finance and the National Economic and Development Authority, alongside the various stakeholders and sectors that will be affected by these proposed measures.
There is no question that we have to do something in response to the oil price hikes. Every household and almost all businesses are feeling its effects. Doing nothing about this issue could very well add to the suffering our people have already endured throughout the pandemic.
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Sen. Sonny Angara has been in public service for 17 years. He has authored and sponsored more than 200 laws. He is currently serving his second term in the Senate.
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E-mail: sensonnyangara@yahoo.com| Facebook, Twitter & Instagram: @sonnyangara/PN
