THE continued surge in global oil prices could affect consumption patterns in the different cities in the country and may in turn impact economic growth, City Council’s Committee on Trade and Commerce chair Councilor George Goking said yesterday.
Goking added that the sustained increase in oil prices is likely to drive inflation beyond the country’s central bank’s target in the second quarter.
“The Tuesday’s increase and the weekly oil price increases are generally to increase inflation and reduce economic growth not only in our city but the entire country,” he said.
In terms of inflation, Goking said “oil prices directly affect the prices of goods made with petroleum products.”
“What is life and the economy after the price of oil reached P100.00? It equals economic trouble,” he said.
Goking explained that oil prices indirectly affect costs such as transportation and manufacturing.
He said that as long as the demand for food continues to rise faster than yield growth, markets will remain tight and prices will remain high and volatile.
“The only real long-term solution to excessive volatility is to invest much more in agriculture,” said Goking adding that engaged in importation is the immediate solution.
“I challenge our national leaders to revisit laws that are now ineffective from pandemic to the oil crisis,” said Goking.
Goking explained to consumers, the microeconomic implications of higher oil prices.
He said that when observing higher oil prices, most consumers are likely to think about the price of gasoline as well since gasoline purchases are necessary for most households.
Goking also said the oil price could be reached P100 if weekly increases continue.
“If it’s (P100 per liter), it is a disaster, it even worsens the poverty level, the businesses, and even the local government unit,” he said.
The same goes for businesses whose goods must be shipped from place to place or that use fuel as a major input, according to him.
“When gasoline prices increase, a larger share of households’ budgets is likely to be spent on it,” Goking stressed which leaves less to spend on other goods and services.
Since Monday, motorists filled up their vehicles with diesel for yesterday’s increase, as the price of this fuel commodity soared by as much as P6.30 to P6.50 per liter, based on a calculation by oil companies.
In separate advisories, Caltex, Cleanfuel, PTT Philippines, Seaoil, and Shell said they raised diesel prices by P6.55 per liter and gasoline prices by P2.70 per liter.
Caltex, Seaoil, and Shell likewise increased kerosene prices by P5.45 per liter.
The price adjustments take effect at 12:01 a.m. on Tuesday.
Just last week, oil firms increased the prices of diesel and kerosene while slashing gasoline prices.
The price movement in the previous week translated to a net increase in prices of diesel by P29.20 per liter and P26.70 per liter for kerosene since the start of the year. The net hike in gasoline prices stood at P23.10 per liter.
Data from the Department of Energy showed that between May 31 and June 2, retail prices of gasoline in Metro Manila ranged from P71.70 to P95.15 per liter; diesel, from P69.65 to P84.05 per liter; and kerosene, from P77.64 to P85.25 per liter.
Industry experts forecast that oil prices would remain elevated after Saudi Arabia Sunday announced that it will raise its crude oil price in July.
This is despite the Organization of the Petroleum Exporting Countries and its allies agreeing to hike their output in July and August.
However, demand for the commodity is also rising, driven by the summer season in the United States and the easing of the coronavirus disease 2019 restrictions in China.
Goking said the oil firms implemented the upward price adjustments based on cost swings linked to the Mean of Platts Singapore, the pricing reference being employed by the players in the domestic downstream oil industry.
