PH, others warned of ‘economic damage’ as oil prices soar

Oil prices may keep their upward trajectory as global demand and supply approach new highs at 100 million barrels per day (mpbd) and with no signs that growth will stop soon, according to the International Energy Agency.

“It is an extraordinary achievement for the global oil industry to meet the needs of a 100 mbpd market, but today, in the fourth quarter of 2018, we have reached new twin peaks for demand and supply by straining parts of the system to the limit,” the IEA said in its latest Oil Market Report.

“This strain could be with us for some time and it will likely be accompanied by higher prices, however much we regret them and their potential negative impact on the global economy,” the Paris-based agency said.

In the Philippines, Malacañang has announced a plan to temporarily suspend an increase in the excise tax on petroleum products scheduled for implementation on Jan. 1, 2019.

The Tax Reform for Inclusion and Acceleration (Train) law provides for an additional tax—covering excise tax plus value-added tax—of P2 per liter of diesel on top of the P2.97-per-liter increase in excise tax implemented last Jan. 1. Before the Train law was passed, gasoline carried a levy of P4.87 per liter in excise and VAT.

Similarly, tax on diesel was supposed to increase by P2 per liter on top of the P2.50 per liter introduced at the start of this year.

“(E)xpensive energy is back, with oil, gas and coal trading at multiyear highs, and it poses a threat to economic growth,” the IEA said.

“For many developing countries, higher international prices coincide with currencies depreciating against the US dollar, so the threat of economic damage is more acute,” the agency added.