Economist says fuel subsidy not the answer to oil price hikes

An economist said that fuel subsidies are not the solution to oil price hikes, amid a massive price increase expected this week.

President Ferdinand "Bongbong" Marcos Jr. earlier said that the government will be providing fuel subsidies in response to fuel price increases seen as a result of the instability in the Middle East. The Department of Transportation said it is already preparing the guidelines for the subsidies.

In Mav Gonzales's report on 24 Oras Weekend, economist and former Department of Social Welfare and Development undersecretary Emmanuel Leyco urged the government to develop contingency plans, especially if the conflict in the region persists.

“Mauubos ang kaban ng bayan kapag tayo ay tuloy-tuloy sa pamamahagi ng ayuda. At hindi pa ito ang katapusan ng pagtaas ng presyo ng fuel… Kailangan magkaroon ng contingency plan ang pamahalaan kung papaano makakapagbigay ng tulong na hindi masyado gagalawin ang ating mga buwis, nang hindi na papataasin o kaya bigyan ng subsidiya ‘yung tamang sektor,” he said.

(The country’s funds will be depleted if we keep on handing out ayuda. This won't be the final increase in fuel prices…The government needs to have a contingency plan on how we will be able to provide help without causing an increase in taxes or to provide subsidies for the right sectors.)

Transport group PISTON, meanwhile, said it is looking into requesting a further fare increase. 

The group also expressed the belief that the prices of oil are just being manipulated by businessmen.

“Wala pa man pong nagaganap na giyera ay tuloy-tuloy na pong tumataas yung presyo ng petrolyo dito sa ating bansa… Malaking dagok ito, malaking pahirap… Sa bawa’t pagtaas at paggalaw ng presyo ng petrolyo ay kaakibat niyan ay yung pagtaas ng mga pangunahing bilihin,” said PISTON national resident Mody Floranda.

(Even before the war started, fuel prices have been increasing here in our country… It’s a big blow, a big burden. And with every increase and movement on fuel prices comes the increase in prices of basic necessities.)

“Kailangan po natin bulabugin ang administrasyon, si Pangulong Bongbong Marcos, na umaksyon siya at maglabas siya ng isang order na isuspindi muna yung implementation ng mataas na buwis sa produktong petrolyo,” he added.

(We need to call the attention of the administration, President Bongbong Marcos, to act and implement an order to suspend the implementation of higher taxes on petroleum products.)

The group will also conduct a protest at Philcoa, Quezon City on Monday and Tuesday, but clarified that it will not be not a transport strike.

Earlier, the Department of Energy said that it met with oil companies to ask the increase in oil prices to be gradual.

The Department of Transportation also said it is prepared to distribute fuel subsidies to Public Utility Vehicle (PUV) drivers.

Industry sources claimed that the price will increase at around P4.90 to P5.20 per liter of diesel and P3.20 to P3.50 per liter of gasoline. — Jiselle Anne C. Casucian/BM, GMA Integrated News