RP'S PUMP PRICES STILL LOWEST DESPITE SURGING PRICES WORLDWIDE
MEDIA RELEASE
August 30, 2005
Despite the skyrocketing prices of oil in the world market, the country's pump prices are still considered the lowest in the region. In particular, the price of unleaded gasoline in the local market is at P32.93 per liter compared to the P93.81 per liter in Hong Kong and P36.25 per liter in Thailand. For diesel, the retail price in the country is P30.95 per liter against P58.31 in Hong Kong and P31.95 in Thailand.
ASEAN countries, particularly Thailand, Indonesia and Malaysia imposed subsidies to depress domestic oil prices. However, these countries infused huge amounts of money to keep the subsidies. Indonesia spent $7billion, Thailand $1.5billion and Malaysia $1.4 billion. With subsidies recently lifted, inflation in these countries is seen to jump double digit, negatively affecting their economies.
"We cannot afford any form of subsidy. But we have to drastically reduce our consumption of imported oil in a regime of extraordinary oil prices to cushion its impact on the economy and to protect our foreign exchange reserves," Energy Secretary Raphael P.M. Lotilla pointed out.
Notwithstanding the government policy not to provide subsidy to stabilize oil prices, monitoring shows that despite the escalating prices in the world market, local retail prices increased relatively lower. Pump prices of unleaded gasoline and diesel rose only by 18 percent and 33 percent respectively from their December 2004 levels compared to the 61 percent and 42 percent increase in their prices in the international market for the same period.
"While there is a wide sentiment among analysts that we have not seen the worst in prices and that volatility will continue to linger, prices in the local market remain one of the lowest compared with that of other countries," Secretary Lotilla stressed.
One of the ways to cut consumption is to introduce the widespread development and utilization of alternative fuels for the transport sector which uses about 46 to 58 % of the country's demand for imported oil.
Yesterday, independent players Seaoil Petroleum, Flying V and Eastern Petroleum have started selling at the pump pre-blended ethanol gasoline which uses 10% bioethanol made from sugar. Consumers are also expected to benefit from this as preblend ethanol gasoline is offered 65 centavos to 71 centavos per liter cheaper than the regular unleaded gasoline.
Another alternative transport fuel already in the local market is pre-blended coco methyl ester (CME) diesel which is produced from coconut.
Estimates show that mandating the use of 5% blend of bioethanol will displace 236 million liters of gasoline or equivalent to US$129 million of forex savings while 10 percent blend will result in potential gasoline displacement of 536 million liters equivalent to US$294 million of forex savings.
For diesel, estimates show that the country is expected to earn forex savings of about P1.2 billion from 1% blend of CME on diesel.
"Oil prices are really beyond our control. But what we can control is our use of oil. I am reiterating our call, let us save oil by using this precious resource responsibly," Secretary Lotilla said.