Philippines Faces Energy Crisis Amid Iran War

The Philippines is confronting a significant energy crisis exacerbated by the ongoing conflict in Iran, which has led to soaring fuel prices and potential disruptions in air travel. President Ferdinand Marcos Jr. indicated that grounding planes due to jet fuel shortages is a "distinct possibility," as several countries have informed Philippine airlines that they cannot provide fuel. This situation is particularly concerning for the Philippines, which relies heavily on imported crude oil, primarily from the Middle East. Budget carrier Cebu Air announced plans to reduce flights starting in April due to rising fuel costs, while other airlines in the region, such as Vietnam Airlines and VietJet Aviation JSC, are also adjusting their operations in response to the crisis.

The Straits TimesIran War: Philippines to use of more polluting fuelThe Diplomat Magazine

In an effort to mitigate the impact of the fuel supply crisis, the Philippine Department of Energy (DOE) has temporarily authorized the use of Euro II petroleum derivatives, which are more polluting than the standard Euro IV fuels adopted in 2016. This measure allows Euro II fuels to be used in vehicles manufactured up to 2015, traditional jeepneys, and in industrial applications such as power plants. Energy Secretary Sharon Garin stated that this decision aims to ensure an adequate fuel supply while providing flexibility to affected sectors. The DOE emphasized that the interim authority is subject to strict quality controls and notification requirements.

The Diplomat Magazine

The Philippines has experienced some of the sharpest increases in fuel prices in Southeast Asia since the onset of the Iran war, with diesel prices reportedly breaching 100 pesos ($1.90) per liter for the first time. This surge is attributed to the country's limited domestic refining capacity, which causes local prices to closely mirror global market fluctuations. The 1998 Oil Deregulation Law, which removed government control over fuel price caps, has further exposed consumers to these volatile price shifts. In response, Senate President Vicente Sotto III has proposed a measure to repeal the law, advocating for greater government oversight of fuel prices.

The Diplomat Magazine

The energy crisis in the Philippines is part of a broader trend affecting Southeast Asia. Vietnam has announced a shift to fully ethanol-blended gasoline and is incentivizing the production of electric vehicles in response to rising fuel prices. Other nations, such as Thailand and Indonesia, are also adjusting their energy strategies, with Thailand increasing biofuel blends and Indonesia advancing a biodiesel program. These measures reflect a regional pivot back to more emissions-heavy energy sources, including coal, as countries seek to address the challenges posed by the conflict in the Middle East.

The Diplomat MagazineIran War: Philippines to use of more polluting fuelThe Straits Times

There are discrepancies regarding the sufficiency of fuel supplies. While President Marcos expressed concerns about potential grounding of planes, Energy Secretary Garin assured that airlines have sufficient fuel orders. This contradiction highlights the uncertainty surrounding the energy situation in the Philippines.

The Straits Times

• “Several countries have already told our airlines they cannot fuel their aircraft, so they have to carry fuel there and back,” — Ferdinand Marcos Jr., President of the Philippines

The Straits Times

• “We are adopting a prudent and temporary measure to help ensure an adequate and accessible fuel supply for sectors that may require limited flexibility during this period,” — Sharon Garin, Energy Secretary

The Diplomat Magazine

The situation remains fluid as the Philippines navigates the complexities of an energy crisis linked to international conflicts, with potential long-term implications for its economy and energy policy.

Iran War: Philippines to use of more polluting fuel