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DOE sees rationing as US acts vs Iran

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BY JOHN LOURENZE POQUIZ

The Department of Energy is readying its contingency plan in the event that the problem in Iran escalates and results in a local fuel supply shortage.

Energy Undersecretary Jose Layug said that the DOE is looking at mechanism where the government would ration fuel consumption in the event supplies become tight.

“We are reviewing our contingency plan. Part of that is cutting down consumption,” Layug told Malaya Business Insight.

“We would have a mechanism where people would be given allocations on the oil they consume. It’s a form of rationing,” he added.

Layug said that the Philippines sources only less than 1 percent of its requirements from Iran.

He said, however, local fuel supply would be threatened if the Strait of Hormuz, which is adjacent to Iran, would be blocked.

The strait is the only passage for ships carrying petroleum from major oil-exporting countries on the Arabian peninsula.

Layug said that because of the supply threats, world oil prices have been going up in past weeks, influencing local pump prices.

“In terms of Iran, (we source a) very small (amount). Less than 1 percent. But more importantly, ever since Iran test-fired its missiles (last week), the international market has gone up,” he said.

“In fact, for the past few weeks, the major reason for the price hikes is Iran. Prices in the international market have gone up,” he added.

Last week, oil firms raised the prices of their unleaded and premium gasoline products by P0.90 per liter. The price of regular gasoline went up P0.60 per liter, while diesel rose P0.30 per liter.

The sanctions approved by President Barack Obama on New Year’s Eve have highlighted the importance of Iranian oil supplies to East Asia’s energy-hungry economies. They have led to a clash of interests between Washington and key commercial and strategic partners over efforts to stop Iran’s nuclear program.

China, the biggest buyer of Iran’s oil, has publicly rejected US sanctions aimed at Tehran’s energy industry, while American allies Japan and South Korea are scrambling to find a compromise to keep critical supplies flowing.

Beijing is buying less Iranian crude this month, but analysts say China is unlikely to support an oil embargo. Instead, they say, the smaller purchases might be a tactic aimed at obtaining lower prices as the West squeezes Tehran.

“We are considering our response and are closely discussing the matter with the US,” a Japanese Foreign Ministry official, Kazuhiro Kawase, was quoted by The Associated Press as saying Friday.

A South Korean foreign ministry spokesman said this week Seoul is in talks with Washington aimed at “minimizing the negative impacts” of sanctions. South Korea imports 97 percent of its oil and depends on Iran for up to 10 percent of its supplies.

China’s foreign ministry rejected the sanctions this week and called for negotiations, leaving unclear whether Beijing might defy Washington, straining relations between the world’s biggest and second-biggest economies.

“Sanctioning is not the correct approach to easing tensions,” said a ministry spokesman, Hong Lei. “China opposes the placing of one’s domestic law above international law and imposing unilateral sanctions on other countries.”

US Treasury Secretary Timothy Geithner is due to visit Beijing and Tokyo next week for talks that officials say will include the sanctions.

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