RP to float oil prices

RP to float oil prices

MANILA (AFP): The Philippines is to partially lift price
controls on domestic oil products from Aug. 12, which should
initially increase gasoline prices and reduce those for other
refined products, a government statement said yesterday.

The Energy Department said an interim scheme, to be called the
"automatic pricing mechanism", would be in effect for a year and
adjusted every month, at the end of which daily prices would be
left to market forces.

The new scheme removes a state-run subsidy called the Oil
Price Stabilization Fund (OPSF) which insulates local consumers
from fluctuations of crude prices in the world market.

It also introduces recently legislated specific taxes on oil
products.

Under the new pricing mechanism, "the wholesale posted prices
of petroleum products will change monthly based on the movements
of the Singapore posted prices," the statement said.

Based on government projections, the new tax and the removal
of the subsidy should lead to slight reductions next month in the
price of "socially-sensitive petroleum products" like liquefied
petroleum gas, kerosene, fuel oil, and aviation turbo, it said.

There will be a "minimal increase" in the price of diesel and
a heftier one for gasoline, it added.