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The World Bank has urged the Philippines to ensure that the increase in oil prices does not compromise its fiscal position, stressing that it should not remove the tax on oil. “As the country comes off several years of fiscal consolidation by lowering deficits and raising revenues, it will be important that the oil shock does not reverse hard won gains,” the World Bank said.

The multilateral lender said that in the short to medium term, revenue increases will also allow the Philippines to bolster its expenditure program to undertake much overdue investments in physical and human capital. It would be important that the Philippines continue to monitor the impact of the oil price shock on the poor and contemplate mitigating measures if necessary, the World Bank added.

The World Bank said fuel tax reductions can compromise revenue objectives as taxing fuel is one of the easiest ways to raise revenue – both because collecting fuel taxes is relatively straightforward and because the consumption of fuels as a group is relatively price and income inelastic.

“Third, from a fiscal standpoint, any measures taken by the administration that would weaken the fiscal stance will reflect negatively on markets and is likely to increase borrowing rates for the Philippines,” the World Bank said. “Any such impact would have additional severe consequences on the fiscal situation.”

The World Bank said losses in revenue ultimately mean less resources for the government to fund its priority programs to help Filipinos. In light of these considerations, the Philippines should resist the temptation to cut taxes in the short-term and take the time to develop a longer-term strategy to contend with higher oil prices, which are likely here to stay, the World Bank added.

Russia and Venezuela - two major oil powers and concerted action from these countries depends ensuring energy security. The talks with Russia President Hugo Chavez proposed the creation of a strategic alliance in the energy field. Also at the talks by representatives of Russian companies «TNK-BP», «LUKOIL» and «Gazprom» signed several agreements with the Minister of Energy and Petroleum of Venezuela, president of state Petroleos de Venesuela (PdVSA) Rafael Ramirez Carreño.

«LUKOIL» entered into an agreement with PdVSA on the joint study of the Junin-3 block in the Orinoco oil belt rivers in the east. Junin-3 block is located in the zone of heavy oil (ie, with a higher sulphur content, paraffin, smolistyh substances), which consequently requires a more complex mining and processing technologies. «TNK-BP» and PdVSA signed an agreement on joint exploration block Ayacucho-2 oil Orinoco province.

As you know, President of Venezuela ceased relations with western oil companies. In particular, as a result of nationalization of the oil industry Exxon Mobil lost assets in that country. Now for the development of heavy oil and offshore sites will be brought Russian companies.

World market prices for oil on July 22, 2008 at the leading oil exchanges declined significantly. Official oil futures prices coming month deliveries were: at the InterContinental Exchange Futures - 129,55 US$/bbl. (IPE Brent Crude); at the New York Mercantile Exchange - 127,95 US$/bbl (Light, Sweet Crude Oil).

The price of oil began the session mildly lower on expectations that Tropical Storm Dolly wouldn’t disrupt oil operations in the Gulf of Mexico. The advance increased after comments from a Federal Reserve official sent the dollar higher against major currencies, a trend that in turn sends commodities lower.

Lower oil prices are diverting attention from earnings for the moment. There’s no questions about some negative earnings reports coming out, but we’re starting to think some of them might be company specific and not broader.