2019’s biggest oil price hike due to Saudi Aramco drone attacks

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Will this be an oil crisis for the Philippines?

Oil companies have announced the biggest price hike this 2019 that will be implemented starting tomorrow, 6:00AM. 

In a text message of Pilipinas Shell Petroleum Corp., there will be a P2.35 increase on gasoline per liter, P1.75 on diesel, and P1.80 on kerosene. 

Petro Gazz would also implement the same increase on gasoline and diesel. 

This biggest hike will happen due to the drone attacks on two major oil facilities of state-run Saudi Aramco in Saudi Arabia last weekend. 

The attacks caused the kingdom to lose 5.7 million barrels per day (bpd) or more than 5 percent of the global oil supply. 

According to the Department of Energy (DOE), this is one of the highest spikes on crude oil in history. 

“Asian crude benchmark soared more than $9 per barrel (up 14 percent) between Sept. 13 and Sept. 17. Reports about potential replacements of lost barrels, however, brought prices lower later in the week. Crude spiked more than $8 per barrel in three days after the attack.” 

It added that this week will be the second straight week that oil companies implement significant oil price hikes. 

Local oil firms last week increased gasoline prices by P1.35 per liter, diesel by P0.85 per liter, and kerosene by P1.00 per liter. 

DOE’s latest data showed year-to-date adjustments stand at a net increase of gasoline by P5.51 per liter, P4.02 for diesel, and P2.01 for kerosene. 

Ensuring adequate oil supply in PH

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The attack on Saudi Aramco. Image source: Aljazeera News

Because of the drone attacks on two of the biggest global suppliers of oil, the DOE has activated a task force to develop contingency measures on oil supply. 

The agency has met with the proposed members of the Oil Contingency Task Force (OCTF) in order to finalize a working draft for the implementation of the country’s contingency strategies. 

The OCTF will be in preparation to address the country’s crisis on oil supply concerns whenever natural or man-made disasters have happened. Specifically, it will be monitoring the possibility of supply disruptions or sharp volatility in world oil prices as geopolitical and disaster-related events have been happening. 

“We realize the importance of addressing issues beforehand so that the government may have contingency measures to sustain the country’s economic growth and provide basic services to the people. The activation of the OCTF is vital to our resiliency because we are currently dependent on oil imports,” Energy Secretary Alfonso Cusi pronounced. 

DOE’s energy security plans 

The Senate committee on energy is now set to review the energy security plans of the Philippines. 

Sen. Sherwin Gatchalian, who is the chairman of the committee, authored the resolution that triggered this inquiry. He said that he wants to look into the plans of the DOE to secure the Philippines the adequate oil supply it needs after the attacks. 

The resolution stated that the committee would look into the DOE’s short-, medium-, and long-term plans in ensuring the energy supplies and mitigating the damaging impact on the country’s oil supply and prices after the attack

“The DOE, as the primary agency in charge of planning and implementing comprehensive programs for the supply of energy, needs to inform the Filipino public about the effects of the Saudi Aramco attack on oil supply and prices in the Philippines,” Gatchalian said.

“The DOE also needs to state its short- and medium-term plans and strategies to ensure continuous and sufficient supply and reasonable prices amid strains in the Middle East as well as its long-term plans and strategies to achieve energy security in order to prevent vulnerability to supply shocks and insulate consumers from unexpected shortages and sharp price increases,” he added.

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