Oil prices are expected to increase by more than P0.50 per liter this week given the strengthening dollar.

“The dollar has strengthened a lot last week and this has a bigger impact than the increase of the oil price per se,” Department of Energy Director Zenaida Monzada said yesterday.

The United States currency was generally strong in recent weeks on investors’ expectation for the tapering of the Federal Reserve’s bond buying program, which is being used to boost expansion of the world’s largest economy.

Last week, the peso declined to 43 level against the dollar although it recovered to the 42 level at the latter part of the week.

Monzada explained that impact of the dollar strengthening on fuel prices alone is about P0.80.

She said more volatility in oil prices is expected in the coming days given the tensions in the Middle East and developments in the US economy.

Monzada explained that oil-producing economies and international energy agencies have projected lower oil demand for this and next year but also reported better production volume.

“It’s the threat of supply distraction that is affecting oil price movements lately,” she said.

Since the start of the year, price of gasoline already went up by P7.40 but it also declined by P7.15 resulting in a net increase of P0.25.

For diesel, its price has increased by a total of P5.18 since but it has also contracted by P6.05, bringing the net increase to P0.87.

Fuel prices have been increased by more than five times so far this year, but Monzada discounted any fuel subsidy from the government because of this.

“There’s no plan for a fuel subsidy right now because the government is not keen on giving out subsidy. Current oil prices are still lower than in previous peaks so at this point we are not discussing what to do,” she added.*PNA

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