ILOILO CITY, Philippines--With rice and other food prices already hitting record levels, Energy Secretary Angelo Reyes said the country should now brace itself for much higher oil prices that, in two years’ time, could be double what they are today.
Citing a forecast by the international investment house Goldman Sachs, Reyes said the price of oil in the world market could hit $200 per barrel price--a level that would have been dismissed as ridiculous years ago--within the next 24 months.
Goldman Sachs had predicted in 2005 that oil would reach $100 per barrel. The price of crude rose sharply to $124 per barrel on Thursday and analysts predict that it could reach $150 this year.
Reyes said the spiraling of oil prices would have a serious impact especially on the public transport sector, which mainly uses diesel fuel. He said cost of commodities and transport would consequently shoot up as well.
"We need to prepare [by being] more efficient [in power consumption] and conserve energy," Reyes told the Philippine Daily Inquirer on the sidelines of a Department of Energy briefing on the power supply situation in Western Visayas on Thursday.
He said the DOE sought to address the problem by focusing on ways of increasing energy supply from local and indigenous sources and managing demand.
"We are aggressively pursuing efforts to locate our own sources of oil and coal, which are conventional sources of energy," said Reyes.
He said this would help the country to become less dependent on imported fuel.
The DOE on Wednesday awarded five petroleum exploration contracts to oil prospecting companies Miocene Mining and Energy Corp., Helios Petroleum and Gas Corp., Burgundy Global Exploration Corp. and NorAsian Energy Ltd.
Asked if removing the value-added tax on petroleum products was being considered to cushion the impact of the rising prices of oil, Reyes said this was up to the fiscal authorities, such as the Department of Finance, Department of Budget and Management and the Philippine central bank.
Suspension of the VAT "will have revenue implications so it that would have to be studied by the economic managers," he said.
Reyes announced that the DOE would conduct regional consultations this month with local officials and energy industry stakeholders to update them on the national energy situation and discuss its regional implications.
The consultations, which will be undertaken through the regional development councils, will also discuss the DOE's programs and projects to address energy concerns and needs of each region.
