Fuel prices may continue to rise amid weakening peso, DOE says

Fuel prices in the country are still likely to rise next week, as the peso slid to its lowest exchange rate in 16.5 years, according to the Department of Energy (DOE). This comes as motorists endured the latest price hikes at the pumps. 

The DOE is telling motorists to brace for more fuel price increases coming 

“Nung trend kahapon lumabas ‘yung global market price sa trading, may bahagyang pagtaas ho, so kung ganito ‘yung tutuluyan nito, magsasama ho, magko-compound ‘yung pagtaas ng presyo at yung pagtaas ng dolyar,” said Energy Undersecretary Gerardo Erguiza Jr. at a Malacañang virtual briefing Tuesday. 

(The trend of the global market price on trading yesterday showed a slight increase, so if this continues, it will be compounded with the appreciation of the dollar. We just hope that the dollar foreign exchange goes down)

Foreign exchange is a significant factor in fuel prices, with the peso further weakening against the U.S. dollar

On Wednesday, June 29, the peso hit Php 55.06 against the U.S. dollar, its lowest since 2005. As a net oil importer, the Philippines uses dollars to purchase crude oil and petroleum products, and the weakening of the peso resulted from the U.S. increasing its interest rates to combat rising inflation. 

The latest adjustment so far saw diesel prices go up by Php 1.20 to Php 1.40 per liter, with gasoline having a more modest hike of Php 0.10 to Php 0.20 per liter. According to DOE data, year-to-date adjustments show a net increase of Php 29.50 for gasoline, Php 44.25 for diesel, and Php 39.65 for kerosene as of June 21, 2022. 

International experts predict that oil prices will continue to increase in the second half of 2022

Erguiza backtracked on his earlier assertion that fuel prices are unlikely to reach Php 100 per liter this year. He said that this is now a possibility should weekly price hikes continue, brought about factors such as Russia’s ongoing conflict with Ukraine. The lifting of COVID lockdowns in countries such as China is also contributing to global demand for oil, making current supplies more expensive.

According to marketing intelligence firm IHS Markit, oil prices could climb even further on the second half of 2022 due to international tensions and reduced output from oil-exporting countries. It said that prices for global benchmark Brent crude could potentially reach $135 (Php 7,400) per barrel, from its current $116.3 (Php 6,400).       

Keep an eye out for more oil price movements at Philkotse.com.