What do we pay for in a liter of fuel?

The continued rise in gasoline prices is hitting Filipino consumers hard. But what exactly makes up the cost of a liter of fuel?

According to Maki Pulido’s Tuesday report on "24 Oras," the Department of Energy (DOE) released a circular in 2019 outlining the unbundling of oil prices.

Here is the breakdown for gasoline prices:

• 24% import cost
• 18% industry margin
• 8% ethanol
• 29% taxes (excise tax, value-added tax, etc.)

The price for diesel has the following breakdown:

• 59% import cost
• 12% industry margin
• 7% Coconut Methyl Ester (CME)
• 22% taxes

This shows that nearly a quarter of what consumers pay for fuel goes directly to the government.

The House of Representatives has been discussing the suspension or removal of the excise tax, while Senator Loren Legarda filed a proposal granting President Ferdinand Marcos Jr. the authority to reduce or suspend excise and VAT on petroleum products.

“We cannot allow Filipino families, farmers, fisherfolk, and public utility drivers to bear the heaviest burden of global crises,” Legarda said.

Senate Committee on Energy Vice Chair Sherwin Gatchalian, however, expressed caution.

“Mas mabigat yun dahil ang pinapatong sa langis na excise tax at customs duties, kung tatanggalin lahat ng yan, of course, mas malaki kabawasan,” he said.

(That would have a bigger impact since removing excise tax and customs duties on fuel would significantly reduce government revenue.)

The DOE said the Philippines currently has around 57 days’ worth of oil supply, lasting until April, and is preparing for potential shortages due to the ongoing Middle East conflict.

“We’re just preparing so that our options remain open. They have already opened the doors for us to buy from countries we don’t usually source from,” DOE Secretary Sharon Garin said, noting that these alternative sources are more costly.—Mariel Celine Serquiña/MCG, GMA Integrated News