Philippines works on long-term plan to cushion high oil prices

Hong Kong (Platts)--30Sep2004

The Philippine government is working on a long-term plan to cushion the impact
of high international oil prices, but has ruled out the possibility of setting
up an oil subsidy fund, a Department of Energy official said Thursday. "The
government is looking into all the necessary and feasible measures to reduce
the impact of oil price hikes on the lives of the average Filipinos,
especially in tempering transport fares and food prices," he said. The DOE has
not endorsed any form of oil subsidy as this would only be a short-term
measure, he said, adding, "We are focused on implementing long-term solutions
aimed at cutting the country's dependence on oil imports and will exploit and
enhance alternative or renewable sources of energy." The DOE has warned
domestic pump prices will remain high for the rest of this year due to the
peak winter demand season. November WTI crude futures on NYMEX fell $1.25/bbl
to $48.65/bbl in the wake of a report by the US Department of Energy showing a
3.4-mil bbl build in crude inventories, in contrast to market expectations for
a 5.1-mil bbl draw.

Meanwhile, chairman of the Senate ways and means committee Ralph Recto has
said the Senate should scrap a plan proposing a Peso 2/liter ($0.035/l) tax
hike on petroleum products. "The timing is awfully wrong. We cannot tell
people to brace for more oil shocks and at the same time sock a Peso 2/liter
tax on them," Recto said in a statement. The Senate has been studying the
proposed plan for several months now. The plan is part of President Gloria
Arroyo's efforts to raise funds for the country's ballooning budget deficit
now at around Peso 198-bil.

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