Fuel prices up by P1 per liter Friday, 2nd hike in 4 days
MANILA, Philippines—Effective Friday, prices of gasoline, diesel and kerosene will go up by P1 a liter, the second increase in just four days and the seventh increase since January, pushing to P5.25 the total increase for a liter of gasoline and to P5 for a liter of diesel.
The series of increases came as unrest in oil-producing Arab countries persisted and international crude prices surged.
Amid the unrest in North Africa and the Middle East, the Philippine government is preparing for a possible disruption in the country’s fuel supply, Energy Secretary Jose Rene Almendras said.
“We need to be prudent. Let’s be ready,” Almendras said on Thursday evening, quoting President Benigno Aquino III’s instructions on ensuring a sufficient fuel supply for the country.
Almendras made the announcement following a meeting with the President on the contingency measures of the country, which imports most of its oil requirements.
<strong>Rationing</strong>
Energy Undersecretary Jose M. Layug Jr. said the government would resort to rationing in a worst-case scenario.
“We are now talking to oil companies in the event we need to ration fuel supplies. We need to finalize the mechanisms under this oil contingency plan,” Layug said.
Once the government sees a sudden reduction in global oil production, at levels which would likely affect supply in the Philippines, the Department of Education (DoE) will “activate” the plan, Layug said.
At present, the national fuel inventory remains healthy at 45 days worth of consumption, he said. The country consumes an average of 300,000 barrels a day.
<strong>Two circulars</strong>
The DoE has issued two circulars aimed at shoring up the country’s fuel supply.
The first circular, published early this week, directs oil firms and bulk suppliers to maintain a minimum inventory of 15 days’ supply of petroleum products.
It requires refiners to maintain a minimum inventory equivalent to 30 days supply, consisting of crude oil and refined petroleum products.
The second directive, published on Thursday, “enjoins all oil companies to engage in mutual product sharing accommodations and similar industry practices to stabilize oil supply.”
<strong>Dubai crude</strong>
For February, the Asian benchmark Dubai crude averaged more than $100 a barrel from an average of $92.52 a barrel in January, hitting a two-year-and-a-half high of nearly $112 a barrel on Feb. 24.
Oil prices fell to $101 a barrel on Thursday in Asia amid efforts toward a mediated resolution to the conflict in Libya, which has cut crude supplies by more than half from the OPEC nation.
Benchmark crude for April delivery was down $1.06 at $101.17 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange.
The contract added $2.60 to settle on Wednesday at $102.23, the highest settlement since Sept. 26, 2008.
In London, Brent crude for April delivery was down $1.50 to $114.85 a barrel on the ICE Futures exchange.
<strong>Mediation</strong>
Venezuela President Hugo Chavez has spoken with Libyan leader Moammar Gadhafi about creating a bloc of friendly countries to help mediate a resolution to Libya’s crisis, Venezuela’s information minister said on Wednesday.
Venezuelan officials did not say how Gadhafi had responded to the proposal.
“If Libya comes back to some kind of normalcy, we could see Brent drop back to $100,” said David Cohen, an economist with Action Economics in Singapore.
<strong>Cut in production</strong>
The International Energy Agency on Wednesday said that a power struggle between supporters and opponents of Gadhafi had cut up to 1 million barrels per day of crude production, more than the group’s previous estimate of as much as 750,000 barrels per day.
Traders are also factoring in the possibility that political upheaval in other oil-rich countries could pinch global crude supplies.
“The spread of protests into other major oil producing nations such as Oman, Algeria and especially Saudi Arabia could keep this oil market on a boil for some time to come,” Ritterbusch and Associates said in a report.
Analysts said sustained oil prices above $100 would eventually undermine consumer demand and threaten global economic growth.
A DoE report quoted Michael Lynch, president of Strategic Energy and Economic Research, as saying that if the “most extreme unrest doesn’t spread beyond Libya to other important oil-producing countries, oil prices could drift back down.”
<strong>Conservation</strong>
With the conflicts in the Middle East and North Africa far from settled, Filipinos may have no choice but to start conserving fuel and just bear the rising fuel prices, Layug said.
He said the DoE would be coming up with print advertisements to advise the public on how to conserve fuel. “We need to save, we need to be more efficient,” he added.
To help cushion the impact of the price increases, Layug said the DoE would ask oil firms to provide bigger discounts at more stations across the country.
He said the DoE would also ask oil firms to stagger price increases.
But what was more important, according to Layug, was to secure an adequate and stable fuel supply in the country. <strong><em>With a report from Associated Press</em></strong>
