ECONOMIST-SOLON: FUEL PRICE HIKES WITH EXCISE TAX LIKELY RIGHT AFTER FIRST PAYDAY OF JANUARY 2018

Right now, the hot button issue is the fuel price hikes. In the months ahead, it is likely that new so-called cause-oriented groups will sprout here and there to try to sow more fear. They will fail.

My latest take on the excise tax on oil products is that the oil companies will wait until or soon after the first or second payday of January 2018 before they start reflecting the impact of the new excise taxes.

The oil companies are wise enough not to shock consumers. Remember what they did when world crude oil prices were rising to and reached US$100 per barrel in 2015? The local oil firms had frequent staggered fuel price hikes. Oil firms are aware of the tolerance levels of consumers.

Future hot button issues would be electricity power rates and metered water rates. I have two sets of policy comments on these.

First, peso depreciation is only temporary and businesses must seize opportunities as they come.

Second, the country must have much more foreign investments, especially of the direct investments into businesses, factories. BPOs, and SMEs. More foreign investments mean more jobs, more dollar inflows, a stable peso-dollar rate, and inflation kept in check.

Those BOI-approved investments, a lot of those should materialize in 2018.

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REFERENCES:

https://www.doe.gov.ph/oil-monitor

http://www.manilatimes.net/dbcc-retains-inflation-target-2018-2020/371114/

https://www.reuters.com/article/oil-options/want-to-bet-on-100-oil-in-2018-some-investors-already-have-idUSL8N1M95TN

https://www.marketwatch.com/story/why-oil-prices-will-never-return-to-100-a-barrel-in-one-chart-2017-02-22