By how much could pump prices drop if excise taxes are suspended?

Pump prices could post a significant decline should President Ferdinand “Bongbong” Marcos Jr. secure emergency powers to suspend excise taxes on fuel, but any price drop will depend on whether he opts to exercise such authority moving forward.

The magnitude of any price drop would largely depend on how much of the excise tax Marcos opts to suspend, whether fully or partially, should he decide to exercise the emergency powers.

Below is a list of the excise taxes imposed on manufactured oils and other fuels that have been in place since 2020, in line with the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Law:

• Lubricating oils and greases - P10.00 per liter
• Processed gas - P10.00 per liter
• Waxes and petrolatum - P10.00 per kilogram
• Denatured alcohol - P10.00 per liter
• Naptha, regular gasoline, pyrolysis gasoline - P10.00 per liter
• Unleaded premium gasoline - P10.00 per liter
• Aviation turbojet fuel, aviation gas - P4.00 per liter
• Kerosene - P5.00 per liter
• Diesel fuel oil - P6.00 per liter
• Liquefied petroleum gas - P3.00 per kilogram
• Asphalts - P10.00 per kilogram
• Bunker fuel oil - P6.00 per kilogram
• Petroleum coke - P6.00 per metric ton

If Marcos totally suspends the excise taxes, retail prices could drop as much as indicated above.

Marcos, who earlier certified as urgent the bill granting him emergency powers to suspend or cut excise taxes on fuel, on Wednesday said exercising such authority is yet to determined.

“That’s a very complicated calculation… We will see. Depends on the trends. We have to watch the trends on oil prices. We just have to look. It’s very hard to say because it’s all speculation. We don’t know how long this will last for,” he said.

The measure grants the President emergency powers when the average price of Dubai crude oil price exceeds $80 per barrel for one month immediately preceding the suspension or reduction of the excise tax.

It now only needs Marcos’ signature to become a law, as the House plenary on Wednesday decided to adopt Senate Bill 1982 or the Act Authorizing the President To Suspend or Reduce Excise Tax on Petroleum Products.

“We’re hoping, as mentioned by the President, that the bill authorizing the President to suspend the excise tax will be passed because diesel is the most sensitive, especially for the riding public," Energy Secretary Sharon Garin said last week.

"Public utility vehicle consumption accounts for 65% of diesel use. That’s P6 less per liter with the suspension,” she added.

Benchmark Brent crude prices climbed around 5% on Thursday to over $108 after Iran’s Pars gas field, the Iranian sector of the world’s natural gas deposit which it shares with Qatar across the gulf, was hit on Wednesday.

Iran has since come out with a list of prominent regional oil and gas targets of Saudi Arabia, the United Arab Emirates, and Qatar, which it said were “direct and legitimate targets” and should be evacuated at once in the coming hours.

The Department of Economy, Planning, and Development (DepDev) earlier said pump prices of gasoline could go down by P10.00, and diesel by P6.00 with the suspension of excise taxes.

Local retailers have increased pump prices for the past 10 weeks for gasoline, and 12 for both diesel and kerosene, amid the ongoing conflict in the Middle East.