Traffic offsets low-oil-price boost on industry growth
LOW OIL prices may be boosting demand for fuel, but the impact of heavy traffic on consumer behavior may be keeping the local market from reaching its full potential growth for refined petroleum products, experts said.
Country chair Edgar O. Chua told reporters traffic was not the kind of fuel consumption booster that oil firms like Shell wanted.
“That’s not the kind of benefit we want because that wastes fuel. We want increase in sales because of increased productive usage but traffic is not productive. That’s not the kind of volume we want to see. I think traffic turns off people from driving,” Chua said.
Executives from other companies said that although an idle car in traffic with a running engine used more fuel, the behavior of some motorists taking public transportation or walking to certain appointments to avoid traffic also affected growth of fuel demand.
Eastern Petroleum Corp. chair and CEO Fernando L. Martinez said via text message, “I have observed at the height of the oil price hike in 2008, motorists conserved and planned their trips a lot. Now traffic has built up.”
The Department of Energy also said that while overall oil demand was up, the full potential increase might be dampened by consumer behavior due to traffic.
“Based on our data, there is a significant increase in consumption this year compared with last year. Partly, I agree but overall oil consumption still increased,” DOE’s Oil Industry Management Bureau chief, Melita V. Obillo, said via text message.
Oil prices are around $40 per barrel at this time, compared to $60 per barrel at the start of 2015.
Compared to the second half of 2014, when oil prices dropped sharply to around $40 per barrel from the peak $110 per barrel early in the year, oil price trends for 2015 have not had severe declines or increases so far.
The International Energy Agency (IEA) said that while an extended period of lower oil prices would benefit consumers, it also has a downside in terms of energy security considering it heightens reliance on a small number of low-cost producers. There is also the risk of a sharp rebound in price if investment falls short, the IEA said in the 2015 edition of its flagship “World Energy Outlook” publication (WEO-2015).
