$80 Oil Trigger Breached; Fuel Tax Suspension Eyed—DOE

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The Department of Energy (D.O.E.) has formally certified that Dubai crude surpassed the $80-per-barrel limit that allows President Ferdinand R. Marcos Jr. to suspend or reduce taxes on petroleum products to ease the burden of high prices.

D.O.E. Secretary Sharon Garin said Tuesday, September 15, that the 30-day average price of Dubai crude reached $99.41 per barrel from August 13 to September 11, well above the trigger set under Republic Act No. 12316 [the law that gives the president the power to temporarily reduce or suspend excise taxes on petroleum products during major price spikes].

“Lagpas na po ito sa threshold na itinakda ng batas, kaya naman opisyal na naming na-certify ito at na-transmit sa D.B.C.C. [Development Budget Coordination Committee] para sa kanilang konsiderasyon,” Sec. Garin said.

The Department of Finance (D.O.F.) said last week that it was awaiting the D.O.E. certification before proposing a full suspension of excise taxes on liquefied petroleum gas (L.P.G.) and kerosene. 

However, the L.P.G. Marketers Association has urged the government to go further and include gasoline and diesel in the tax relief as fuel prices surge amid continuing tensions in the Middle East. 

Not Automatically Suspended

The certification does not automatically suspend fuel taxes. Under R.A. 12316, the President may suspend or reduce excise taxes upon the recommendation of the D.B.C.C., in coordination with the Secretary of D.O.E. 

In addition to this, the law allows the relief to cover specific petroleum products and last for up to three months at a time.

Fuel Prices Surge as Cause

The certification follows two straight weeks of large price hikes at gas stations.

On Tuesday, gasoline prices went up by P5.68 per liter, diesel by P4.31, and kerosene by P4.62. Added to the previous week’s hikes, total increases over two weeks reached P10.37 for gasoline, P9.49 for diesel, and P10.20 for kerosene. 

Certain gas stations are now charging more than P100 per liter for some fuel products. 

Global oil prices are climbing because of worsening conflicts in the Middle East and worries about shipping paths, especially the Strait of Hormuz, which is vital for worldwide oil deliveries. 

Mechanism Used in 2nd Quarter

The government used this same rule in April after the D.O.E. certified that the 30-day average price of Dubai crude had hit $93.71 per barrel. 

President Marcos Jr. then suspended excise taxes on L.P.G. and kerosene through Executive Order No. 114. 

Those taxes were brought back in July after the D.O.E. certified that the monthly average had dropped to $79.45 per barrel, falling below the legal limit.

“This is a step forward in protecting our motorists, and we’ll continue pushing for consumer relief amid the Middle East crisis in coordination with economic managers,” Sec. Garin said.