Author Topic: HIGHER GASOLINE PRICES WILL MAKE ORDINARY MOTORISTS CHANGE THEIR HABITS  (Read 609 times)

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HIGHER GASOLINE PRICES WILL MAKE ORDINARY MOTORISTS CHANGE THEIR HABITS

Romero foresees motorists keeping cars in garage, riding TNVS often, and buying less gas

The oil firms know the market and consumers well. They will be careful. They will not be rash in their decision-making on fuel price increases especially for gasoline and lubricants which have the highest new excise tax rates of P7.00 and P8.00, respectively. They know the Philippine market is price sensitive.

As an economist, I now see microeconomics is at work in the minds of the technical experts and officials of the oil firms.

It is quite possible the oil firms will not pass on to gasoline consumers the full impact of the excise tax.

It is also probable they are now generating options and crunching the numbers because a P7.00-price hike would be enough to significantly reduce demand for gasoline.

We have seen in previous big-time price hikes that the oil firms staggered their price adjustments. They might, as they have in the past, spread out the seven pesos in installments. Maybe the staggering could be a P1.50-hike per week. There are other combinations they can do.

If the oil firms' economists say the P7.00 is too much to pass on fully at the gas pump, they might recommend to management that the pass on be anywhere within the range of  50 percent to 90 percent of the full P7.00 excise tax per liter.

Many owners of gasoline-powered vehicles could use their vehicles less. Some could now switch to public transportation because there are different options to choose from.

The TNCs and TNVS will see their ridership spike because private vehicle owners’ gasoline-powered cars will spend more time parked at home.

The MMDA and DOTr should now seize this opportunity of a real shift in consumer choices. More point-to-point buses should ply the major roads to ferry office workers and students.

For jeepney drivers, the government can revive the Pantawid Pasada Program to subsidize PUJ purchases of diesel which now has an excise tax of P2.50 per liter. (END)

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