The National Economic and Development Authority is studying the proposal of the private sector to cut tariff on crude oil and petroleum products to zero amid the rising global demand for oil, a government press release said.

"The energy sector is proposing a tariff reduction on crude oil, refined petroleum products and asphalt from the current 3 percent to zero," Acting Socioeconomic Planning Secretary Augusto Santos said.

Santos said the proposal of the small and big oil companies was now being studied by NEDA. "We will complete the study within two weeks," he added.

In 2008, Malacañang issued an order to temporary cut tariff to zero when crude oil topped US$ 100 a barrel.

Oil products originally carried a 3-percent tariff rate prior to the government’s reduction scheme. Every percentage-point cut from the rate translates to about P11 billion in foregone revenues for the government, the press release said.

The government re-imposed the three percent tariff on oil in November 2008 after prices of oil in the world market have gone down.

Santos said the reduction of tariff could result in loss of government revenues, but it would reduce oil prices.

Last month, the price of Dubai crude oil averaged US$ 77 per barrel, up from US$ 43 per barrel recorded in the same period last year.

Data from the DOE showed that as of Feb. 2, prevailing domestic prices of fuel are: diesel between P31.75 to P34.05 per liter; gasoline, P41.20 to P43.10; E10, P41.40 to P46.02; 11-kilogram liquefied petroleum gas cylinder, P610 to P684 and auto LPG, P26.99 to P28.40, the press release added.*

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