Petroleum firms will be passing on in increments to motorists up to Php0.80 per liter increase in gasoline prices.
The pass-on charge would cover the ten percent increase in volume for ethanol blend in fuels, according to the Department of Energy (DOE).
Based on a Manila Bulletin report, DOE Oil Industry Management Bureau director Atty. Rino Abad said that ethanol-linked adjustment in gas prices first appeared in the cost swings on Tuesday, which is the main reason why oil firms reflected smaller Php0.20 rollback on gasoline products.
Abad explained that if price cuts were based on the Mean of Platts of Singapore (MOPS), consumers would have enjoyed a bigger Php0.40 to Php0.50/liter rollback on gasoline products.
Since it was still a smaller portion of the aggregate ethanol cost recovery that had been passed on, Abad noted that additional adjustments are still expected in the next rounds of fuel price movements.
He further emphasized the staggered price escalations had been resorted to industry players so they wouldn’t burden consumers with sudden one-time increase.
Prices at the domestic pumps usually move on a weekly basis, but other cost components are only adjusted based on quarterly pricing, like the ethanol blend on gasoline and coco methyl ester mix on diesel.
Oil firms said local sourcing of ethanol had been triggering the prices at the gas pumps, especially this time when the cost of local production have been on the upticks.
Government policy supports the procurement of ethanol supply from local producers so this can lead to employment and cash-stream opportunities to local farmers.
The DOE has not increased the ten percent ethanol blend cap since its implementation in 2009, but already has plans of doing so. There also has been reluctance to go for importation because it won’t benefit local farmers.