Fuel prices have been raised for a third straight weekend by oil companies and industry officials say further increases should be expected despite the prospect of a fresh reduction in oil tariffs next month.
The latest price hike was initiated by oil refiners Pilipinas Shell Petroleum Corp., Petron Corp. and Chevron Philippines (formerly Caltex), which collectively control some 85% of the market.
“Please be advised that due to the significant increase in world oil prices we are increasing prices of gasoline, diesel and kerosene by 50 centavos/liter effective 12:01 a.m., 15th March 2008,” Shell spokesman Roberto S. Kanapi said in a text message.
Fuel prices are now at an average of P44.96 for gasoline and P37.94 for diesel.
The government, seeking to mitigate the impact of high oil prices, this year revived a tariff reduction scheme which sets stepped cuts in the 3% duty. Based on established “trigger” prices, a 1% duty could be imposed in April, officials said.
The tariff rate is currently at 2%, up from the 1% imposed when the scheme was first implemented in February.
Dubai crude on Friday hit an all-time high of $100.17 per barrel, while the Mean of Platts Singapore (MOPS) for diesel is at $120 per barrel.
The steady ascent of both benchmarks was marked by a solid 15-day average of above $91.70 per barrel for crude and $113 per barrel for diesel, which points to a tariff cut next month. Even without formal Energy department confirmation of the data for Dubai and MOPS diesel, an official said the tariff cut would likely be at that level.
“It’s just indicative. But it’s nearly there,” the official said on Friday.
In its March 11 oil monitor, the Energy department said “The month-to-date average price of Asian Dubai crude increased by about $5 per barrel over the February average. Likewise, gasoline and diesel averages were higher by about $4/barrel and $10/barrel, respectively, over the previous month levels.”
The import tariff was cut to 1% in February but was raised to 2% this month due to weaker oil prices. The increase translated into a 50-centavo hike in the first week of March.
A downward adjustment, which estimates show will be worth 25 centavos, might not be enough to offset record world oil prices, industry officials said.
An official noted that the tariff could be eventually cut to zero by the summer if oil prices keep rising. Although MOPS diesel has already breached the trigger price for a zero tariff, Dubai crude has been lagging.
MOPS and Dubai have to be at $117 and $103.5 per barrel, respectively, for a zero tariff.
MOPS is steamrolling its way to record prices and Fernando L Martinez, president of Eastern Petroleum Corp., said “[We are raising prices] to partially recover a significant jump in international oil prices of up to $126 per barrel of finished petroleum products.”
Eastern and ten other retailers base their costs on MOPS.
“So independently of Dubai, we have to raise our prices,” Mr. Martinez has previously said.