House Committee on Ways and Means chairperson Joey Salceda on Friday proposed a five-point plan to respond to the threat of rising oil prices amid the ongoing conflict between Russia and Ukraine.
Salceda warned that the world crude prices could reach US$130 per barrel if the situation persists and Russian oil exports are sanctioned.
He said Russia accounts for 12% of the global oil supply and 24% of natural gas supply.
“Although it is not very likely that Russian oil exports will be severely restrained, still expect some near-term oil price hikes at the very least,” Salceda said.
Salceda said government action is needed to mitigate the effect of world crude prices in the country.
He said if crude oil prices are still at US$100 by March 15, President Rodrigo Duterte should call for a special session to consider options for the reduction or suspension of the fuel excise taxes under the Tax Reform for Acceleration and Inclusion (TRAIN) law.
“The most fiscally sensible option is, at the very least, to reduce the oil excise tax at a level that is equivalent to what we will gain in VAT to prevent the government from going further into already elevated deficit levels,” Salceda explained.
Salceda’s proposal will result in a P2.06 per liter reduction in gasoline prices, P2.34 in diesel prices, and P2.89 in kerosene prices.
“Second, the government should open all public transportation options to full capacity immediately. This will help lower transport costs for those who are forced to take private cars due to the lack of available alternatives after the COVID-19 restrictions. It will also lower our consumption of fuel,” Salceda added.
Third, the solon said Duterte should immediately issue an Executive Order mandating the Department of Energy, the Department of Trade and Industry, and the Philippine Competition Commission to strictly monitor energy companies to prevent uncompetitive practices and hoarding in the sector.
“To ensure that no maintenance issues will exacerbate the likely impact of oil price hikes on electricity costs, I also recommend that the EO containing a mandate for the DOE to require inspections and maintenance checks on all generation plants. In July 2021, maintenance issues worsened the effect of oil prices on electricity prices,” he added.
He also recommended using the Contingency Fund (P4.5 billion), the President’s Socio-Civic Fund (P3 billion), and the P1 billion fuel voucher subsidy to mitigate the impact of fuel increases.
Salceda said the declaration of a state of calamity for economic reasons should be allowed when oil prices become unmanageable to allow local government units to use their calamity funds for fuel vouchers and other mitigating measures.
“We can’t risk too-little, too-late interventions at this stage of our economic recovery. Of course, fiscal stability is a goal we must keep, but the immediately important concerns now are inflation and economic growth, and we can’t have good results in both if oil prices are unbearably high at the pump,” he added.
