Lower demand, higher prices push LPG supply to 50 days

THE COUNTRY’S liquefied petroleum gas (LPG) supply increased to the equivalent of 50 days of inventory, driven by a seasonal decline in consumption that was further exacerbated by soaring prices, according to the LPG Marketers Association, Inc. (LPGMA).

LPGMA Founder Arnel U. Ty said the nationwide demand plunged by 30% month on month in April, mainly due to high prices of LPG products.

Mr. Ty told reporters on Tuesday that the decline this year has been more pronounced than in previous years when LPG demand would drop by 15% in the summer months of March, April and May.

“That’s the reason why the inventory of LPG right now increases from 35 days to 50 days — because of demand reduction,” he said.

Mr. Ty noted consumers, especially those in rural areas, have shifted to charcoal and firewood for cooking materials as LPG costs surge.

Aside from diesel and gasoline, the Philippines is also a net importer of LPG. It sources 91.4% of its LPG supply from Asian countries.

The Middle East conflict has sent global oil prices soaring. Local LPG prices jumped by as much as P403 this month, pushing the costs to around P1,600 per 11-kilogram (kg) cylinder.

In an unexpected move, President Ferdinand R. Marcos, Jr. on Monday suspended excise taxes only on LPG and kerosene to cushion the impact of rising fuel costs on households, without halting levies on gasoline and diesel.

Scrapping excise tax on LPG is expected to bring down prices by P3.36 per kilo or P36.96 per 11-kg cylinder.

“We already implemented P3 reduction in our members’ store, composed of around 20% of the total market. So, they (consumers) can get immediate relief from the suspension of the excise tax,” Mr. Ty said.

Since the current inventory was already charged with excise tax, he said that the group may have to “absorb” costs amounting to between P50 million and P70 million.

“Because we can recoup it when the time comes that excise tax in the future will be reinstated,” Mr. Ty said.

To further beef up the country’s LPG stockpile, the Philippines has moved to procure from other countries through a government-to-government arrangement.

Mr. Ty said the government and the private sector have secured around 22 million kilos of LPG, which is set to arrive between May 15 and June 1. Around 44 million kilos of LPG is still under negotiation. — Sheldeen Joy Talavera