PCCI warns businesses: Brace for high oil prices

By Justine Irish D. Tabile, Reporter

THE PHILIPPINE CHAMBER of Commerce and Industry (PCCI) warned businesses of a possible increase in fuel prices due to geopolitical tensions in the Middle East.

“There are headwinds we are facing, recently, the Middle East conflict again brings about this uncertainty,” said PCCI President George T. Barcelon in a media briefing on Thursday.

“We hope that this will not flare up to the point wherein the big Middle [Eastern] countries would be involved,” he said, adding these are oil producers.

Mr. Barcelon said the conflict could add to the volatility of oil prices, which were recently affected by the cutback in oil production by Saudi Arabia due to softer demand.

Data from the Department of Energy showed that local oil companies implemented a decrease of P3.05 per liter for gasoline, P2.45 per liter for diesel, and P3 per liter for kerosene, effective on Tuesday.

These price adjustments resulted in a year-to-date net increase of P12.25 per liter for gasoline, P11.35 per liter for diesel, and P5.94 per liter for kerosene.

Mr. Barcelon said that despite the recent price adjustments, the conflict in the Middle East might trigger an increase in oil prices.

“And this, of course, is a concern because the government priority is to mitigate inflation,” he said.

UNCERTAIN OUTLOOK FOR 2023
He said that the conflict in the Middle East is also one of the reasons why the outlook for the economy remains uncertain for the last two months of the year, adding to previous concerns such as the lower-than-expected gross domestic product (GDP) growth and hints of another rate hike by the US Federal Reserve.

“The last report on GDP is not as what we expected. The projections are higher than the GDP figures that were presented,” Mr. Barcelon said.

In the second quarter, the Philippine economy expanded by an annual 4.3%, weaker than the 6.4% growth in the previous quarter and 7.5% a year ago.

“There’s also the concern that the US Federal Reserve has in mind to possibly adjust interest rates,” Mr. Barcelon said.

“I have read in the paper that Bangko Sentral ng Pilipinas is contemplating because our peso has devaluated somewhat and if we don’t mirror the increase of interest rates abroad, the peso might devaluate further,” he added.

He said that this will affect the economy as consumers will be able to buy less than what they used to before.

Mr. Barcelon said he wants to remain positive that the sluggish economic growth would be negated by the seasonal rising demand in the last quarter.

“Coming towards the ‘Ber’ months, definitely, the Christmas spirit will be there, and the economy definitely will go along and pick up maybe 1% or 2%,” he added.

Meanwhile, PCCI Vice-President for Industry Perry A. Ferrer said that economic activity in the last quarter will be based on remittances from overseas Filipino workers (OFWs).

“We will see probably $13 [billion] to $14 billion [in remittances] in the last quarter of this year, which will stir the economic activity,” Mr. Ferrer said.

“We probably won’t meet the target of 6% but with the $14-billion OFW remittances we will see a nationwide activity which is always in time for our Christmas season,” he added.