• Oil firms welcome lower prices

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    WITH the lower prices of crude in the world market, local oil players are not worried at all saying that they could even benefit from it, but they expressed fears that the government might bear the brunt as its tax collections would be largely affected.

    Independent players PTT Philippines, a subsidiary of Thai oil firm PTT Public Co. Ltd., and Eastern Petroleum Corp. said lower prices will definitely lead to higher oil consumption thus, increasing their volume of sales.

    Chavalit Punthong, PTT senior vice president for Oil Business Unit of PTT Thailand, said whenever there is cut in prices of petroleum products, the players would not be affected by it.

    “With the price cut, the market will not be affected but people will consume more when the price go down. So that means higher volume of sales,” said Punthong.

    PTT Philippines President and Chief Executive Officer (CEO) Sukanya Seriyothin said the company is projecting an increase of more than one million liters of sales this year as a result of the lower oil prices.

    Edicer Almendras, one of the dealers of PTT in Luzon said, they are even happy whenever there will be roll back in prices of petroleum products since this would also lower their working capital requirements.

    “We would be happy if the prices would go down to P 5 per liter. We are not happy when the prices go up because the cost of running the business is more expensive.

    We don’t make money from price increase, we actually have to put more capital,”
    said Almendras.

    He said lower oil prices would definitely spur consumption that would lead to higher revenues.

    “You can just imagine if the price will go down to P5, how many people would be driving around using more cars that will eventually promote consumption,” he added.

    Besides motorists, Almendras said companies could also be benefited by the continued decrease in oil prices.

    “More companies are using oil to run their businesses so these companies will benefit because of low oil prices,” he said.

    For his part, Eastern Petroleum Chairman and CEO Fernando Martinez said the price cut will also lower the firm’s capital but would spur consumer demand.

    “We are positive that we will do better this year with lower cost of crude since this will lead to lower operating capital . Consumer demand is expected to grow at lower cost,” he told The Manila Times.

    Another industry player, who requested anonymity, said not oil dealers but the government is likely to be affected by the continued reduction in oil prices.

    The source explained that with the lower oil prices, the taxes being collected by the government from crude sales will also consequently decrease.

    “The big-time rollback in oil prices means big reduction in government revenues.

    Lower price of oil means lower 12 percent Value Added Tax collection,” the official of the oil firm told The Times.

    Finance Undersecretary Gil Beltran earlier said lower oil prices would also reduce government’s collections of taxes and duties from oil firms.

    He added that the lower oil prices would put at risk the revenue collection targets of the bureaus of Customs and Internal Revenue for this year.

    Since peaking in June last year, oil prices have gone down more than half.

    Reports indicated that JP Morgan had slashed its average Brent crude price forecast for 2015 to $49 per barrel from the previous $82.

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