Fueling a Crisis: The Cost of Government Inaction
The images of United States-Israeli airstrikes in the Middle East may look very distant to us, but they are hardly hypothetical when it comes to the consequences. When the U.S. and Israel launched major bombing operations against Iran on February 28, global attention was brought to geopolitics and not towards the domino effect this creates on something immediate: oil. Oil is the bloodstream of the entire global economy. When conflict disrupts its flow, as it has been with the closure of routes such as the Strait of Hormuz, cutting off a fifth of the world’s oil supply, these effects ripple outward. We see this with current oil prices over ₱7,000 per barrel, up from ₱4,000.
The government’s reaction to the multifaceted crisis from the effects of the U.S.-Israeli airstrikes is not fast enough for the rapidly changing situation. The country imports 95 to 98% of its oil, either directly or indirectly, from Middle Eastern supply chains. In fact, the entire country is structurally tied to oil. Transportation, logistics, and even electricity generation rely heavily on petroleum. When oil prices spike, everything else does too—food, electricity, transportation, and other necessities.
Despite the gravity of the situation, the government's response has been disconcertingly slow, further exacerbating this problem. A crisis committee was formed only three weeks after the conflict, raising serious questions about preparedness and foresight. In a country where many already live paycheck to paycheck, this is more than just an energy crisis. Calling it one minimizes the scale of the country’s current situation. Inflation is only the beginning of this crisis, as its effects spread through the economy, weakening the peso and mounting wage pressures.
Moreover, there is a risk of systemic collapse, threatening the very infrastructure upon which modern life depends. Rotating brownouts due to fuel shortages, supply chain disruptions, and widespread inflation affecting food and basic goods are just some of these possible effects. Limited oil supply means that not only will the country’s public transportation cease to operate, but all transportation—land, air, and sea—will also be affected. Moreover, the government’s willingness to pay a premium for emergency supplies means that the country will face astronomical fuel prices in the months ahead. Every household will feel its effects on food, electricity, water, transportation, and even medicine. The country has already experienced the following signs: ₱130 per liter diesel fuel, low reserves, and the closure of some fuel stations. This is neither a threat nor a prediction, but rather an unfolding trajectory towards a sinking social economy.
The country has systems in place to address national crises like the Legislative-Executive Development Advisory Council (LEDAC), Department of Economy, Planning, and Development (DEPDev), and Department of Energy (DOE), which were established to ensure immediate action in times of national risk. However, these systems were not properly utilized in proportion to this national crisis.
Meanwhile, in other countries, some low-income households that use heating oil will be eligible to access financial aid to help with costs; some government agencies have been told to work from home, and even countries that rely heavily on the Gulf states for fuel imports have declared Wednesdays a public holiday for government institutions to conserve fuel. These actions recognize the simple truth of this crisis requiring urgency. However, the Philippines is handicapped by its oil deregulation policy, which limits the government’s ability to intervene during extreme fuel price hikes that lead to high consumer costs. This policy leaves prices to market forces, entailing that it won’t be effective in safeguarding consumers when global fuel prices skyrocket. While this policy is aimed at encouraging competitive pricing, the lack of stabilizing mechanisms is detrimental to the country’s economy in times of global volatility.
The absence of decisive leadership has transferred the burden elsewhere. Private companies are scrambling to secure supply chains, and oil companies are searching for alternative supply sources. For instance, Petron Corporation, owned by San Miguel Corporation’s Ramon Ang, purchased about 2.48 million barrels of crude oil from Russia in hopes that this will keep its refinery running until the end of June. Additionally, community efforts are filling the gaps where government efforts are lacking. The support of community pantries and support systems, such as those for jeepney drivers and low-income workers, demonstrates how ordinary citizens are making do. Ana Patricia Non is one such citizen, having started a community pantry during the COVID-19 pandemic and now reviving it to help public utility drivers with soaring fuel prices. The common people have had to step up to help out those affected..
At its core, this is not just an energy crisis; it is a test of leadership and decision-making. The Philippines is not in control of the global oil market, but it can control how it prepares for, responds to, and protects its people from the crisis's impacts. Delays, minimization, and fragmented action are the last things our country needs. The Philippines needs speed, integration, and transparency to encourage trust and confidence in the face of uncertainty. The real question is not whether or not the country will be affected—because it already is—but when its leaders are willing to act like it.
