LKI Press Statement 2022-003
February 12, 2022
Consumer group urges government to protect consumers from skyrocketing oil prices
Consumer group advocate Atty. Vic Dimagiba of Laban Konsyumer Inc. urges the Government to closely monitor global and local oil price movements and to recommend measures that would cushion its inflationary impact on commodities.
Dimagiba said high fuel prices can drive inflation higher from the January inflation of 3 percent, and higher prices of basic goods impact badly on consumers especially those who belong to the vulnerable sectors like the daily wage earners, the public transport drivers and riders, the elderly, persons with disability, ethnic minority and the food poor.
“We call on the government to remain vigilant despite the lower inflation in January and implement measures such as temporary reduction of taxes on fuel products and approve contracts to mitigate the impact of consumer prices of higher fuel and power prices in the coming months,” Dimagiba said.
He added that the net increase for gasoline was Php17.65 a liter, diesel was Php14.30 a liter, and kerosene Php11.45 a liter last year. For the current year, the increases are Php5.70, Php7.95, and Php7.20 per liter, respectively. Diesel and kerosene are socially sensitive products and naturally hurts the pocket of poor consumers.
Dimagiba said fuel prices continue to climb, as Dubai crude is projected to increase by 6.5 percent in 2022 compared to last year. Dubai crude is the benchmark for fuel prices in Asia and from which the Malampaya gas price is indexed.
Dimagiba shared that several consumers have even reached out and highlighted the following suggestions on what the government can do to protect consumers:
· Reinstate the oil stabilization fund and regulate the oil industry.
· Promote the shift or use of electric vehicle.
· No politics that serve the interest of the oligarchs.
· Freeze or suspend Value Added Tax and excise taxes on fuel products.
· Price control under pandemic landscape. Not an ideal choice but necessary.
· Lower taxes are another option.
· Lift the increases in the suggested retail price of basic goods.
He said the government should not let its guard down, adding, “Power generation costs are set to increase as we approach summer. This is not only due to higher fuel costs but also due to the precarious supply situation. The regulators have issued warnings of red and yellow alerts and when these alerts occur, it will trigger higher spot market prices and higher generation costs from distribution utilities and electric cooperatives.”
Dimagiba said the government should also reconsider the buyback or renationalization of Petron, and buy back the majority shares of Malampaya to ensure cheaper electricity.
Dimagiba pointed out that fuel and power costs indirectly affect the cost of transportation and production of basic goods and services. Thus, when fuels and power prices go up, prices of food and other commodities also tend to go up. So far, in Metro Manila power rates had gone down by around twenty (20) centavos per kilowatt-hour (kWh).
Dimagiba emphasized the need to suspend the excise tax on fuel products, impose a temporary price freeze on basic commodities, suspend the application of fare hikes, while the government should give out fuel discounts coupons for drivers and operators consuming 50 liters a week.
Dimagiba said a special tax audit of oil companies, traders, and fuel importers should also be done to determine whether the correct taxes are paid amid the 2021 high fuel prices increases.
He added that diesel and gasoline prices should be included in the list of basic commodities, which are subject to price freeze or price control in times of calamity and disasters, and to review and repeal the weekly oil price formula that results in an identical amount of price adjustments among oil companies and retailers.
Dimagiba said, “Some of these concrete and reasonable proposals from consumers are doable and can be done, if only the regulators have the political will to protect consumers from these unabated oil price hikes.”