THE Department of Energy (DoE) said on Tuesday that it will propose to Congress the abandonment of the Dubai crude benchmark as a trigger for various policy responses, saying the benchmarks might no longer adequately reflect market realities.
Energy Undersecretary Alessandro O. Sales told a Senate hearing the DoE is drafting a policy note that would change the reference from Dubai to the Mean of Platts Singapore (MOPS), which is an average price of refined petroleum products such as diesel, gasoline and kerosene.
“The DoE is devising a proposal to change our trigger because the current trigger is not appropriate for the movement of fuel prices in times of crisis,” Mr. Sales said during the Senate’s Proactive Response and Oversight for Timely and Effective Crisis Strategy ad hoc committee hearing.
Mr. Sales explained the price difference between Dubai Crude and Diesel have widened from $15 to $20 per barrel to approximately $60, thus necessitating a change in trigger from Dubai Platts to MOPS.
The Dubai price is the default benchmark for crude shipped to Asia, and is often subject to volatility during periods of disruption in the Persian Gulf.
MOPS reflects the landed price of crude in Singapore as well as the cost to process it into petroleum products. Singapore refiners then supply the inventory of fuel retailers in the Philippines that do not operate refineries.
Senator Sherwin T. Gatchalian pointed out in the hearing that the trigger event — currently $80 per barrel of Dubai crude — could set in motion Philippine government measures like the suspension of excise taxes and the release of the Pantawid Pasada fuel subsidy program of the Department of Transportation.
Mr. Gatchalian concurred that the DoE needs a different trigger.
The $80 per barrel level was surpassed on March 13 when it hit $89.02 per barrel according to the DoE.
Energy Secretary Sharon S. Garin, in the same hearing, said the DoE has so far obtained three to four days’ worth of oil supply in addition to the current stockpile, which is good until the end of April.
“I don’t think (running out of supply) will happen, but the worst case scenario is the price will be really high. We need to be willing to pay that,” Ms. Garin said.
Ms. Garin said the DoE has P20 billion in funding from the Department of Budget and Management to build up fuel reserves, and can tap P15 billion in unused Philippine National Oil Co. It is also seeking a P10-billion credit line from the Land Bank of the Philippines. — Kaela Patricia B. Gabriel
