Oil supply remains ‘very tight’ despite price rollbacks says DOE

Katrina Domingo, ABS-CBN News

Posted at Jul 19 2022 03:53 PM

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MANILA — World oil supply remains tight even though oil firms have rolled back pump prices for the third straight week, an official of the Department of Energy said on Tuesday. 

“Yung supply side ay very tight. Napaka liit ng diperensya ng supply versus demand,” said Rino Abad, director of the DOE’s Oil Management Bureau. 

(The supply side is very tight. The difference between supply versus demand is still slim.)

Abad explained that the rollbacks were due to a decrease in global oil demand after China implemented several lockdowns as cases of COVID-19 increased in Asia’s largest economy.

“Ito ay malakihang bansa kaya kapag sila ay nagkaroon ng ganitong mga problema ay apektado directly yung global consumption,” Abad said.

(This is a large country that's why when there are problems like these, global consumption is also affected.)

“Isang aspeto diyan ay ang pagbaba ng economic demand kapag humihina ang economic activity ng China,” he added.

(One aspect is the decline of economic demand when China's economic activity gets weak.)

The United States’ decision to hike interest rates has also slowed down the consumption of oil, the energy official said. 

“‘Yung pagpipigil na yan ay dinadaan sa pagcocontrol muna ng demand side through interest hike para hindi po madaling gumamit ng pera at vis a vis at pag mahal po ang pag gamit ng pera, ay humihina ang economic activity at tinatamaan diyan ay demand side at ang pag hina din ng fuel demand,” he said.

(The decline in oil consumption happens through control on the demand side like the interest hike. Using money in that sense will be difficult thus the weakened economic activity that affects the demand side and the fuel demand.)

“Ang US ay nagkokosidera na magkaroon ng another round of interest hike. Kapag yan ay sinusugan ng US, alam natin na susunod na ang iba’t ibang central bank ng ibang parte ng mundo… Kapag ganun po ang nangyari, malaki ang tiyansa na magkakaroon tayo ng tuloy tuloy na roll back,” he said.

(The US is considering another round of interest hikes. If it happens, we know that the different central banks worldwide will follow suit, making rollbacks possible.)

The DOE is pushing to review several energy laws to give the agency more power to mandate oil players to explain their pricing to the government.

“Magkaroon po ng akmang kapangyarihan ang government na ma-require ang mga oil company na magbigay ng report na maggbibigay liwanag kung ano yung nangyayaring rason, including yung estimate paano nag come up yung isang adjustment,” Abad said.

(Government will have the power to require oil companies to provide a report shedding light on what happened, how they came up with the estimates or adjustments.)

“Magkakaroon po tayo ng analysis [kung] tingin natin ay masyadong mataas ang prices,” he said.

(We will have an analysis if we think the prices were high.)

The government has been shelling out billions of pesos to subsidize the fuel of drivers from the transport and agricultural sector, as well as providing free bus rides to consumers.