The adverse effects of the Organization of Petroleum Exporting Countries’ (Opec) decision to cut oil production for the first time in eight years may be blunted by several local factors, including the country’s gradual shift to other sources of energy and motor vehicle use.
“We are seeing shifting behaviors. Instead of using petroleum [products for motor vehicles], more people are walking or taking electric vehicles,” Department of Energy (DOE) Undersecretary Felix William Fuentebella said in an interview with radio station DZBB.
He also outlined other factors that could impact prices either positively or adversely, including the cost of transporting petroleum products from the Middle East to the Philippines, as well as labor issues affecting foreign oil producers.
Most importantly, however, local petroleum prices are impacted by the foreign exchange rate, where the local currency’s recent weakness against the US dollar means the same amount of pesos can buy less crude oil on the international market.
The Opec decided this week to reduce production by 1.2 million barrels a day starting Jan. 2017. This sent oil prices to soar to above $50 a barrel.