Senate bill seeks to classify gas, diesel as basic necessities to impose price freeze during national emergency

Prices of petroleum products have surged to unprecedented levels just a month into the United States-Israel war on Iran. As a result, a lawmaker introduced a bill that would classify gasoline, diesel, and other petroleum products as basic necessities, subjecting them to a price ceiling during a national emergency.

Despite being a primary driver of rising transportation costs and food prices, petroleum products are not explicitly covered by the Price Control (RA 7581). 

Senate Bill 2011, filed by Senator Bam Aquino, seeks to bridge the gap in the said law, which protects consumers from soaring prices during times of crisis by automatically freezing the prices of essential goods upon the declaration of a state of calamity or emergency.

“The Philippines is in the midst of a fuel price crisis, and Filipino families are feeling the strain…This proposal complements broader efforts to deliver targeted assistance, support workers and small businesses, and ensure the continuity of essential services during this period of uncertainty,” the bill reads.

President Marcos Jr. has already placed the country under a state of national energy emergency, though some lawmakers, including Aquino, are pressing the administration to declare a full state of national emergency to address rising prices of fuel and food. 

Inflation is expected to hit between 7.4 percent and 8.9 percent this month and could spike as high as 14.3 percent under the “worst-case scenario” in the months ahead, or when crude oil reaches $200 per barrel for an average of 180 days, Planning Secretary Arsenio Balisacan projected. 

At present, only LPG (liquefied petroleum gas) and kerosene, under the types of petroleum products, are considered basic necessities, thereby covered by the price ceiling during periods of crisis situations.

RA 7581 defines basic needs as prime commodities like rice, corn, bread, eggs, vegetables, canned fish, and red meat. 

Coffee, sugar, cooking oil, salt, laundry soap, firewood, charcoal, candles, and drugs are also classified as essential under the law.

If passed into law, SB 2011 will extend the allowable period for price control on petroleum products from 15 days to 30 days, ensuring that government interventions remain effective amid sustained price increases.

Aside from subjecting petroleum products to price control, the senator is also calling for the suspension or removal of the 12-percent value-added tax (VAT) on fuel products to cushion the inflationary impacts of persistent oil price hikes to the consuming public, who are already grappling with the soaring prices. 

As of Monday, prices of diesel are facing record highs, ranging from P115 to P124 per liter. If the 12-percent VAT is removed alongside the temporary suspension of excise tax, which is already a law, diesel prices are expected to drop by almost P20 per liter, according to Aquino. 

It could also reduce the prices of LPG and kerosene by P3 per kilogram and P5 per liter, respectively.

However, the Department of Finance warned that suspending the excise tax could cost the government a staggering P121.4 billion in revenue, though the projected shortfall could reach as high as P136 billion if coupled with the proposed suspension of the VAT. The estimated revenue foregone covers only eight months, from May to December. 

Data from the DOF showed that revenue collections from excise tax and VAT on petroleum products totaled approximately P160 billion from 2021 to 2025.

Gasoline is the primary contributor, with an average of P71.2 billion annually, followed by diesel at P65.6 billion. 

According to the DOF, the projected revenue shortfall of P136 billion accounts for 0.45 percent of the country’s gross domestic product and will prevent the government from incurring a larger deficit, leaving several programs unfunded.