Fuel stockpiling too expensive for Philippines–DOE official

by Lenie Lectura – February 1, 2016

from Business Mirror

The Department of Energy (DOE) on Monday said fuel stockpiling in times of falling crude prices in the world market remains an option for the Philippines, but doubted that this is feasible given the huge costs involved.

Oil prices have gone down for the past weeks. Crude oil fell below $30 a barrel on January 12 for the first time in 12 years. In the Philippines oil firms have implemented four successive oil-price rollbacks for diesel and kerosene since the start of the year. Gasoline prices, on the other hand, went down three times.

“To have an oil stockpile is good at this time, since prices are low, but do the players or the government [should] have the facility and the financial capability to do so,” Energy Director Melita U. Obillo said in a text message, when sought for comment.

She said it could cost P300 billion to stockpile fuel for a year. But even on a quarterly basis, the government could still not afford it, given the miniscule budget of the agency.

The DOE’s budget last year was around P700 million only.

A couple of years back, the Philippine National Oil Co. had considered fuel stockpiling “for the country’s use in times of extraordinary need.” Back then, it was estimated that may require some P2.4 billion to acquire 50 million liters of diesel.

Oil firms did not reply yes when sought for comment.

Meantime, oil firms announced on Monday a price increase effective Tuesday.

They said in separate advisories that the price of gasoline will go up by P0.45 per liter; P1.20 per liter for kerosene; and P1.05 per liter for diesel. The price adjustment will take effect at 6 a.m.

Fernando L. Martinez, Eastern Petroleum chairman and CEO, said the latest price adjustment reflects the current uptrend of oil prices in the world market.

“Analysts believe the geopolitical factors in the Middle East are playing a bigger part in the actual oil production than the statements from energy ministers who’d like to see higher prices,” Martinez said.

Obillo said there is no forecast yet if prices in the world market will remain on the rise. “As of this time, we cannot say if the upward is going to be sustained. This will depend on whether Russia and the Opec [Organization of the Petroleum Exporting Countries] will be able to meet and agree to cut their production,” the DOE official said.

Oil prices came under further pressure because of the dim prospects of a coordinated cut in production by leading exporters, led by the Opec and Russia, due to their differences.

On January 26 oil firms implemented a price cut in gasoline by P0.60 per liter, P1.10 per liter for kerosene and P0.90 per liter in diesel.

Two more price rollbacks were implemented on all petroleum products on January 12 and 19.

On Monday oil firms also slashed liquefied petroleum gas price by P3.40 per kilogram, equivalent to a P37.40 decrease for a standard 11kg household cylinder.

They also reduced the price of auto LPG by P1.90 per liter to reflect the international LPG contract prices for the month of February.