Brace for P60 a liter of gas as crude oil boils past $111

CONSUMERS may have to brace for another round of oil price increases this week, which could bring the price of gasoline close to P60 a liter in Metro Manila after world oil prices soared above $111 a barrel on Friday.

The price of the benchmark Dubai crude fetched between $111 and $115 a barrel on April 4 to 7, up from below $110 the previous week.

Based on the industry’s rule of thumb, domestic pump prices go up P1 a liter for every 3-dollar increase in the price of a barrel of crude, or about P0.33 a liter for every dollar increase.

The $5-a-barrel jump in crude prices in just one week could translate to an increase of around P1.50 a liter at the pump.

Gasoline in Metro Manila is now retailing at P52.10 to P58.12 a liter, and diesel at P44.95 to P47.50.

The prices of petroleum products have risen 11 times since the start of the year, adding P7.50 to a liter of gasoline and P7.70 to a liter of diesel.

“The increases in pump prices will persist as conflicts escalate in Libya and the Middle East, consumption for fuel in China increases, the US economy improves, and the uncertainties in demand for rehabilitation efforts in Japan continue,” the Energy Department said in an advisory early this week.

Surging oil and food prices have stoked inflationary concerns for governments worldwide due to their potential adverse impact on economic growth.

“Oil prices are at a point where we could begin to see demand destruction,” Mike Wittner, head of commodities research at Societe Generale, told the Reuters news agency.

“It already looks like the United States may just be showing some signs of demand destruction. The United States is always the country where you see the impact the most because there are no subsidies and hardly any tax burden.”

Unrest in the Arab world had added premiums of $20 to $25 to oil prices since the toppling of the regimes in Tunisia and Egypt in the last few months, Wittner said.

The International Monetary Fund on Thursday said the global economy was entering a period of scarcer oil, adding that tighter fundamentals could cause price spikes rivaling the 2008 run-up that drove oil to nearly $150 a barrel. –Alena Mae S. Flores, Manila Standard Today