Why the Philippines is bracing early for an oil shock

Dubai: The Philippines’ declaration of a national energy emergency is not a reaction to an immediate crisis, but a calculated move to get ahead of one.

By signing Executive Order (EO) 110, President Ferdinand Marcos Jr. has acknowledged a hard truth facing many import-dependent economies and that is in today’s geopolitical climate, energy security can change quickly and with far-reaching consequences.

What triggered the move

The decision comes against the backdrop of rising tensions in the Middle East, due to the conflict involving the US, Israel, and Iran. While the Philippines is geographically distant from these nations, its economy is tied to global oil flows. A significant portion of the world’s crude passes through the Strait of Hormuz, making it one of the most critical chokepoints in global energy trade.

Any disruption there has an effect on oil prices. For the Philippines, which imports most of its fuel, this translates into higher costs, supply uncertainty, and inflationary pressure. The emergency declaration is therefore leaning to prepare for a plausible worst-case scenario.

How EO 110 changes the response

At its core, EO 110 introduces a whole-of-government approach to energy risk. The creation of the unified package for livelihoods, industry, food, and transport brings multiple agencies under a single coordinating system, ensuring a more cohesive decision-making. 

This is significant because energy shocks rarely remain confined to one sector. A spike in fuel prices affects transport costs, which then feed into food prices and broader inflation. By aligning departments responsible for energy, transport, social welfare, agriculture, finance, economy, and budget, the government is attempting to manage these interconnections in time.

The order also expands state powers in key areas. Relevant authorities can intervene in fuel procurement, streamline permits, and act against hoarding or price manipulation. State-linked firms may step in to secure supply, including making advance payments of 15 percent for fuel imports if necessary. 

Why it matters 

For ordinary Filipinos, the impact will likely be gradual but tangible. Energy conservation measures are expected to tighten, with businesses and public institutions encouraged, or required, to optimise consumption. The country’s energy department has been tasked with ensuring that power generation prioritises efficiency and cost-effectiveness, a move aimed at keeping electricity prices stable.

Transport will be the most sensitive pressure point. Public transport systems depend heavily on fuel, and any sustained increase in prices means pushing fares higher. That, in turn, could wear away household purchasing power and burden the working and middle class. By acting early, the government eyes to prevent such chain reaction, or at least soften its impact.

At the same time, the emergency framework seeks to ensure that essential services, from healthcare to logistics, continue to operate without disruption. This is an important aspect of crisis management, maintaining continuity in daily life even as underlying conditions develop.

Why now and what it signals

The timing of the declaration reflects how governments are responding to global uncertainty. Rather than waiting for crises to directly hit, there is a growing regard on pre-emptive action. In this case, EO 110 is as much about readiness as it is about response.

Moreover, it highlights the vulnerability of economies that rely heavily on imported fuels. The Philippines’ exposure is not unique; many countries in Asia like India, Thailand, Sri Lanka, and Myanmar among others, face similar risks. What sets this move apart is the early and straightforward recognition that energy security is inseparable from economic stability.

What happens next

The emergency measures are set to remain in place for a year, giving the government a window to manage immediate challenges while laying the groundwork for longer-term resilience. If global tensions ease, the order may simply serve as a precautionary buffer. If it escalates, however, the move could become imperative to maintaining economic stability.

In the long run, the declaration could accelerate the Philippines’ transition towards more diversified energy sources. Periods of volatility often act as catalysts for reform, pushing governments to invest in renewables and reduce dependence on imported oil.

For now, EO 110 is a demonstration of how distant geopolitical events can shape local realities. In an interconnected energy market, even countries far removed from conflict zones are not insulated from its effects. The Philippines’ response underscores that preparedness is not optional but essential.