DOE-Visayas Says Oil Price Slump Only Temporary

(PIA 7) — The Department of Energy – Visayas Field Office (DOE-VFO) said the plummeting prices of crude oil in the world market is only temporary and that based on past trends, prices of oil fall after every three years.

Chief of the DOE-Visayas Energy Industry Management Division Engr. Saul Gonzales said, that based on reports from international analysts on the current global oil situation, price index of oil would see an increase within the year.

“The law of supply and demand is a huge factor in the huge drop of oil prices in the world market,” said Gonzales adding that there is excessive oil production but low demand. Another factor cited by Gonzales is that industries across the globe are adopting energy conservation measures that also contributed to the reduction in oil demand.

Gonzales said the Philippines largely benefit from the tremendous drop in oil prices as over 90 percent of the country’s oil consumption is imported. “We expect a reduction in prices of prime commodities and transportation,” said Gonzales during the recent forum of the Association of Government Information Officers (AGIO-7).

Gonzales urged the public to see the opportunity as a means to save as like any other cycle, after a downhill trend there is no other way but for oil prices to go up.

President of the Cebu Chamber of Commerce and Industry (CCCI) Teresa Chan, on the other hand said, she expects the situation to remain unchanged for the next one to two years.

Chan agreed that the law of supply and demand plays a big role in the oil price slump citing the US drop of consumption demand from the world market as it now produces its own oil of nine million barrels per day.

The global oil situation may be good for the Philippines as a net importer but countries like Russia and Venezuela which have huge oil resources are experiencing an economic meltdown, said Chan.

Chan further said the huge price oil cut is good for the business sector adding that she expects housing and other construction materials to go down.

Chan said the implementation of the provisional decrease in public utility jeepney (PUJ) fare from eight pesos to seven pesos is not enough as oil prices continue to fall. “I believe that transport (PUJ) fare should be lower at six pesos,” said Chan.

The CCCI president said the huge oil price reduction is a chance for the public to save. “Just because the cost of oil is very cheap, people might want to buy cars as I advise them to save instead and use it to hike their amortization payment in housing,” said Chan. (mbcn/fcr/PIA-7)