THE PALACE is currently studying a proposal asking President Rodrigo R. Duterte to declare a state of economic emergency due to rising oil prices.
“This is carefully being studied by… the Office of the Executive Secretary,” the President’s spokesman, Jose Ruperto Martin M. Andanar said in a televised briefing.
Fuel prices have been rising sharply after the invasion of Ukraine, which triggered worries about an embargo on Russian oil, taking that country’s production off the market and restricting supply.
Senators said they stand ready to return from recess for a special session to facilitate legislation that may be needed to support such an emergency declaration, should President Rodrigo R. Duterte choose to summon many of them back from the campaign trail.
“It’s part of our work. If the President calls for a special session, it’s incumbent upon me to convene the Senate,” Senate President Vicente C. Sotto III, who is running for Vice-President, said in a Viber message.
The latest fuel price adjustments raised the price of diesel by P5.85 per liter (/L), gasoline P3.60/L, and kerosene P4.10/L. The risk premium for oil has risen significantly after the Russian invasion.
“I support the call for a special session to address rising prices, especially fuel and power, and to provide assistance to those who need it,” said Senate President Pro Tempore Ralph G. Recto in a Viber message.
Senator Panfilo M. Lacson, Sr., who is running for President, said he will return to the chamber if Mr. Duterte calls a special session. “Whether or not I will support a declaration of a state of economic emergency will depend on the proposal to be submitted by Malacañang.”
Majority Leader Juan Miguel F. Zubiri, who is seeking re-election, said the government should consider alternative fuels and e-vehicles as long-term solutions.
“We need to think long-term, to avoid coming to another situation like this in the future. So long as we are dependent on foreign oil, our prices will be (influenced by) the very volatile international arena as well,” he said in a Viber message on Tuesday.
“That is why we must strengthen our local alternative fuel sources, like biodiesel and bioethanol, which can be produced in the country,” he added.
Mr. Zubiri said he wrote a bill, the proposed Biofuels Act of 2006, which sought to create an alternative fuel program, but it did not receive government support. “We were hoping to follow Brazil, India, Thailand, and Malaysia, which have their own biofuels production as it is cheaper and more homegrown.”
“It is a pity that it was not promoted well and I was hoping it would help sugar and coconut farmers,” he said.
The majority leader also backed electric vehicles for daily transport to reduce reliance on gasoline and diesel.
Citing the proposed Electric Vehicles and Charging Stations Act, which was recently ratified by Congress, he urged the government to fully implement the measure in order to encourage the adoption of electric vehicles.
“As we’re seeing now, we cannot afford to be dependent on imported fuel. We have to cultivate our own fuel industries, and ensure that we have sustainable fuel sources that our people can depend on at all times,” he added.
As a short-term measure, Mr. Zubiri pushed for the suspension of the fuel excise tax.
“With these prices, we should consider the suspension of the fuel excise tax to give our people some welcome respite from the weekly increase in fuel prices,” he said, “especially PUV (public utility vehicle) operators and drivers, who are still trying to recover from the pandemic.”
Senate Minority Leader Franklin M. Drilon said in a statement that there is no legal obstacle preventing the Department of Finance (DoF) and the Bureau of Internal Revenue from suspending the collection of fuel excise taxes on their own authority, according to his reading of the Tax Reform for Acceleration and Inclusion (TRAIN) law.
“The provision of the TRAIN Law should be interpreted liberally, not just in light of suspending the increases in excise taxes but also its imposition,” he said. “It is a situation which calls for the liberal application of the law and for compassion.”
Should the price of Dubai crude, the benchmark for Asia, hit $120 per barrel, the Department of Energy (DoE) estimates that gasoline prices may rise to P78.33/L, while the price of diesel may rise to P68.97/L.
“We are not seeking an exemption from taxes here and therefore a strict construction of the law is misplaced. Filipinos are suffering. The burden should be borne by the government,” Mr. Drilon said.
The minority leader noted that the TRAIN law was made not to “tie the hands of the government” and slow its response to the detriment of consumers. “We cannot wait for the law to be amended before we act. The situation is changing rapidly by the day and we need to act fast.”
Under the TRAIN Law, Mr. Drilon said the DoF “may recommend the suspension of the excise tax on fuel” after an annual review.
Senator Sherwin T. Gatchalian, who chairs the chamber’s Energy committee said “the fundamental problem why we are experiencing high prices of oil is that we import close to 100% of our oil requirements, making our country very susceptible to global price shocks.”
The Philippines, he added, has no “shock-absorbing mechanisms,” but only has targeted programs like the Pantawid Pasada Fuel Program for PUV drivers to subsidize their fuel purchases.
He said the fuel subsidy given to drivers through the program and to farmers and fishermen should increase by 50%. He also said the Pantawid Pasada program should be extended to food transporters.
The DoE late Monday proposed to the President and other cabinet members that the Pantawid Pasada program be increased to P5 billion, and the P500-million fuel subsidy to farmers and fisherfolk be doubled to P1.1 billion.
Mr. Gatchalian said the suspension of excise taxes on fuel should be a last resort if fuel prices remain elevated over the next few months.
Energy Secretary Alfonso G. Cusi said at a Tuesday media briefing that it is not yet time to declare a state of economic emergency. “It is not necessary at this point.”
Energy Undersecretary Eduardo Gerardo G. Erguiza said the problem requires further study, particularly on the regulatory regime governing fuel pricing.
The department has been pushing for the amendment of the Oil Deregulation Law to give the government the power to intervene in times of crisis.
On the matter of tapping indigenous sources of fuel, Mr. Andanar said at his briefing that the Philippines needs the expertise of the private sector to exploit the resources thought to lie under Reed Bank, in the northeastern Spratly Islands.
“It’s going to need the cooperation of big private partners. You know when it comes to oil exploration, no one government can do this alone,” he said, following a question about Reed Bank, which the Philippines calls Recto Bank.
“We need the expertise of big business, the expertise of other countries, nations (with experience of) exploration,” he added.
The Recto Bank basin is estimated to hold 165 million barrels of oil and 3,486 billion cubic feet of gas, according to the DoE.
President Rodrigo R. Duterte said on Monday that the Philippines must honor its exploration agreement with China in the Recto Bank to avoid “potential trouble,” saying some companies are trying to interfere with these arrangements.
Mr. Duterte said he will uphold the deal until the end of his administration. “If we change our stance, it’s dangerous.”
In November 2018, the Philippine government signed a memorandum of understanding on cooperation in oil and gas development with China in the South China Sea, parts of which are claimed by the Philippines and other Southeast Asian countries.
In 2016, a United Nations-backed tribunal rejected China’s claim to more than 80% of the sea based on a 1940s map. — Kyle Aristophere T. Atienza, Alyssa Nicole O. Tan