OIL companies are expected to slash fuel prices over the weekend. The rollback is unprecedented—as much as P2.40 per liter for gasoline and P2 for diesel—and reflects the slide in the price of crude in the world market.
Global crude stockpiles have been rising because the demand for fuel has not grown substantially in the past months. It is a curious situation; crude prices traditionally begin to move up as winter sets in and the need for heating fuel kicks up. That is not happening.
The Organization of Petroleum Exporting Countries (OPEC) usually is quick to address an oversupply of crude by reducing its output. But Saudi Arabia, OPEC’s most influential member, has decided against it. The kingdom, in fact, has cut the prices of Arab light grade oil bound for Asia by $1.90 a barrel and for the United States by 70 cents.
An investment analyst in Singapore sees Saudi Arabia “definitely fighting for market share” as an oil glut looms.
Four decades ago, OPEC was the supreme overlord of the world’s oil market, dictating prices and using crude as a political weapon. Today, the once-powerful cartel has lost much of its clout, and faces tough competition from such rivals as the US, Russia and even China. Energy analysts predict the price war between OPEC and non-OPEC oil producers to heat up. The Saudis are “threatened by US oil production, and they are acting to try to break the US producers’ back,” noted one analyst.
The price war is of course welcome news for oil-importing countries like the Philippines. According to Department of Energy records, the average pump price of diesel fell from P44.63 per liter in January to P36.71 in November. That’s about 20 percent, a substantial drop. The decrease in the price of LPG over the same period is even more significant—25 percent, the Energy department said.
By itself, cheaper fuel is already something to rejoice about. But its benefits must not be confined to motorists, public transport operators and cooking gas users. The government must see to it that a bigger slice of the population enjoys the benefits as well.
There is a growing clamor to return the minimum jeepney fare to P8. The fare was raised to P8.50 last May following the series of fuel price increases. A rollback to P8 is definitely justified.
We are also looking forward to a reduction in airplane and ship fares. And there is no longer any excuse for utility firms like Meralco not to slash their monthly billings.
Lower transport and energy costs will directly impact on consumer goods. We are glad that the Department of Trade and Industry has ordered its Consumer Protection Group to find out how much could be shaved off from the suggested retail price of basic necessities and prime commodities.
The DTI had announced it will sit down with the departments of agriculture, energy and health to discuss the impact of the oil price slash. We hope such a coordination will lead to tangible results.
“The steady decline of oil prices should now have a significant impact on the prices of all products and services. At the minimum, they should decrease by three percent,” Trade and Industry Secretary Gregory Domingo has said.
We will be waiting, Mr. Domingo.