The Philippines will take delivery of 1.04M barrels of diesel to boost fuel supply
By Chloe Mari A. Hufana, A reporter
A government-sponsored shipment of 1.04 million barrels of diesel is expected to arrive this week, bolstering the Philippines’ fuel capacity as risks to global supplies grow, the Presidential Palace said on Sunday.
In a statement, Chief Secretary Ralph G. Recto said the purchase is part of the government’s efforts to stabilize fuel supply amid the volatility of oil markets related to the war in the Middle East.
The delivery adds to recent measures aimed at diversifying energy sources, including a commitment from Indonesia to support coal supplies and the recent influx of Russian crude oil.
President Ferdinand R. Marcos, Jr. he said the Philippines has enough fuel for 45 days and is buying an additional million barrels to strengthen the buffer stock.
Mr. Recto also revealed the expected results from the new sources in the Malampaya gas field later this year, which he said will greatly support the country’s electricity supply situation.
The government is putting together ways to provide assistance to vulnerable sectors. Fuel subsidies are being extended to cover around 250,000 public transport drivers, while additional aid is being provided to farmers and fishermen to reduce inflation.
Authorities have also stepped up efforts to conserve fuel following the declaration of a national power emergency. More than a thousand government offices were inspected, and restrictions were placed on non-essential fuel consumption, as the government sent both supply and demand responses to rising energy costs.
REVIEW OF LEGAL DETERMINATION
Meanwhile, an energy policy analyst said the Philippines needs a strong energy security strategy that reduces exposure to oil prices and restores the government’s ability to manage fuel supply risks, as policymakers weigh possible changes to the Fuel Cutoff Act amid rising prices.
Noel M. Baga, who is the organizer of the Center for Energy Research and Policy, said that the repeated increase in pump prices reflects long-term structural weaknesses rather than short-term disruptions, leaving the economy more vulnerable to fluctuations in global oil markets.
“The Oil Spill Act is a symptom of a broader structural problem,” said Mr. Ask via Facebook Messenger. “We are fully exposed to world prices and commodity shocks because we have given up the entire buffer in the name of withdrawal.”
Mr Marcos last week said amendments to the 1998 Oil Cut Off Act were being considered as the war in the Middle East fueled higher oil prices and weakened the peso.
He warned, however, that reforming the law will take time, as households and businesses face immediate pressure from high transportation and energy costs.
“There is no reduction, which means we are discussing everything that can be done to do something to help reduce the impact of the war in the Middle East,” said Mr. Marcos told reporters on March 27. “But what we are focusing on right now … amending the Oil Cut Law will be a long discussion. I don’t know when it will happen.”
The Philippines depends almost entirely on imported oil to power its economy, making it vulnerable to foreign supply disruptions and price swings exacerbated by the conflict involving Iran, which has pushed energy costs higher around the world.
Mr. Baga said that reconsidering the reduction of regulations is unlikely to bring relief in the near term from the increase in the price of fuel, but he said that it is still necessary to fix the gaps in the institutions that leave the country exposed.
He cited the absence of a strategic fuel reserve, limited domestic refining capacity and the diminished role of the Philippine National Oil Co. as the main weakness.
He said the active role of the state in the purchase and distribution of fuel can help to stabilize the economy in times of national stress and high market volatility.
Instead of focusing only on legislative amendments, Mr. Baga said the government still has tools to measure price increases using existing laws.
“The President already has the tools he needs: to classify oil as a priority commodity and to set the price under Sections 4 and 7 of the Price Act as amended by Republic Act No. 10623,” he said. “That doesn’t require a new law.”
Such measures can provide temporary relief to consumers, said Mr. Baga, although he warned that they are not a substitute for the deep changes needed to strengthen the security of electricity in the country.
Pressure is mounting on Congress to reconsider repealing the law. Senate President Vicente C. Sotto III filed Senate Bill No. 1984 on March 24 seeking to repeal the 28-year-old law, which allows oil companies to set pump prices based on market forces and limits direct government intervention.
Mr. Sotto said the increase in oil prices worldwide has reopened the debate on whether the state should regain the authority to influence fuel prices in times of high volatility.
In the House of Representatives, the Makabayan movement also called for the repeal of the Oil Deregulation Act, arguing that deregulation has left consumers exposed to international prices. The agency has combined the proposal with calls for a billionaire tax break, saying the revenue could fund programs to help with rising fuel costs.
The administration has already asked for emergency measures. Mr. Marcos last week declared a one-year national emergency as fuel prices rose and concerns grew over security of supply.
Issued under Executive Order No. 110, this decree applies directly to the energy sector and is intended to give the government greater flexibility to respond to potential supply disruptions and price increases.
The President established an inter-agency framework, the Unified Package for Livelihoods, Industry, Food and Transport Committee, or UPLIFT, to coordinate measures aimed at stabilizing fuel supply, stabilizing the economy and protecting vulnerable sectors from high electricity costs.
