Brace for twin power, fuel blows: Marcos orders four-day workweek

Fuel retailers are bracing for a potential shock at the pumps next week, with industry stakeholders pointing to diesel prices rising by P20 per liter and gasoline climbing close to P10 per liter.

The estimates are circulating among oil players as global markets react to the escalating tensions in the Middle East.

The sharp increases will severely impact primarily jeepney drivers, the poorest lot among public transport workers, as practically all their vehicles use diesel fuel.

Regulators, however, have remained conspicuously silent on pump price movements, declining to disclose any projections even as market signals point to one of the steepest adjustments in recent years.

To cushion the effects of high electricity and fuel prices, President Ferdinand R. Marcos Jr. has ordered the temporary adoption of a four-day workweek in some executive branch offices beginning 9 March, as part of the government’s contingency measures to ease the impact of the ongoing Middle East crisis on the country.

In a video message issued Friday, Marcos said the move aims to help conserve electricity and fuel amid global tensions that threaten energy supplies and to drive up costs.

“On the part of the government, starting Monday we will temporarily implement a four-day workweek in some executive offices,” Marcos said.

The shortened work schedule will apply only to selected government offices, while agencies providing emergency and essential services, such as police, firefighters and frontline public service offices, will continue operating under regular schedules.

The Chief Executive also directed government offices to avoid unnecessary travel and activities, including study tours, team building events, and in-person meetings that could be conducted online.

At the same time, he instructed agencies to cut electricity consumption and petroleum use by 10 to 20 percent as part of broader energy-saving efforts.

Marcos also ordered the Department of Foreign Affairs, Department of Migrant Workers and Overseas Workers Welfare Administration to continue coordinating on assistance to Filipinos in the Gulf countries, including those seeking repatriation.

He said preparations were underway for the evacuation of Filipinos who wish to return home once travel becomes safe.

Electricity rates threatened

Earlier, the Palace said the government had been studying the possibility of a four-day work week to conserve energy if tensions between Israel and Iran escalated further.

Palace Press Officer Claire Castro said the proposal was being considered as part of the administration’s preparations for the potential economic effects of the conflict.

The tensions could spill over into the power market, with regulators warning that higher global fuel prices may drive up electricity rates in the Wholesale Electricity Spot Market.

The Energy Regulatory Commission said Friday it met with the Independent Electricity Market Operator of the Philippines (IEMOP) to review market simulations assessing how the escalating geopolitical tensions could affect domestic electricity prices.

IEMOP projections showed that higher global fuel prices could place upward pressure on WESM prices, particularly if supply disruptions persist.

The simulations examined scenarios involving increases in international coal, oil, and liquefied natural gas (LNG) prices, as well as possible supply constraints in the power system.

The analysis indicated that higher fuel costs could lead to higher WESM clearing prices as generators incorporate these costs into their market offers.

Anxiety builds

Behind the anxiety is a market tightening fast. Escalating tensions involving the United States, Israel, and Iran have jolted crude supply expectations, sending benchmark prices and regional fuel markers sharply higher.

Leo Bellas, president of Jetti Petroleum Inc., said the jump in Mean of Platts Singapore prices reflects the tightening supply in Asia as refiners scramble to secure replacement crude cargoes.

“Expectations of more refining run cuts could tighten fuel supplies even further,” Bellas said.

Some Chinese refiners have begun cutting runs and suspending fuel exports, shrinking the available supply pool in the region just as demand remains firm.

Diesel markets appear specially exposed. Middle East crude tends to be rich in distillates, making the diesel supply more vulnerable when flows from the region are disrupted.

Traders are also watching how long shipping routes in the Middle East remain congested as storage tanks across the region rapidly fill up, raising the risk that producers may be forced to curb output if exports cannot resume soon.

Global markets remain on edge as tensions threaten oil and liquefied natural gas (LNG) supply routes, including the Strait of Hormuz. This key corridor carries about one-fifth of global oil and LNG shipments.

For now, regulators are keeping their numbers close to the chest. Industry watchers say releasing projections in the middle of a volatile geopolitical standoff could fuel speculation in already jittery fuel markets.

Aggressive defense

“This is part of our proactive approach,” ERC chairperson and CEO Francis Saturnino C. Juan said. “We conduct stress tests to understand possible risks early and ensure that consumer protection mechanisms are in place should global fuel volatility persist.”

The Philippines relies heavily on coal and LNG for power generation, making the sector sensitive to international commodity price movements.

According to IEMOP’s analysis, higher fuel costs alone may push up prices in the WESM, where electricity is traded in real time.

Price pressures could intensify if large generating units experience forced outages, which may tighten supply and allow more expensive plants to set market prices.

The IEMOP said final market data will be released over the weekend once Friday’s trading results are fully consolidated.

The ERC said regulatory safeguards remain in place, including the Secondary Price Cap mechanism, which is automatically triggered if sustained price spikes breach regulatory thresholds.

The commission also directed the IEMOP and the ERC Market Operations Service to closely monitor market activity and report any unusual or suspicious behavior to ensure that no participant abuses market power or takes advantage of prevailing market conditions, particularly during periods of heightened global fuel price volatility.

“Our priority is to protect consumers from undue price volatility while ensuring a stable and reliable power supply,” Juan said. “Preparedness remains important given the Philippines’ exposure to global energy markets.”

War spreads

The Middle East war unleashed by the US-Israeli attacks on Iran has swelled outwards to Cyprus, Sri Lanka, Turkey, and Azerbaijan, and risks drawing more countries into the conflict.

The United States and Israel initiated the war by launching strikes on Iran and killing its supreme leader, Ali Khamenei, on Saturday, but the war has since extended its geographical scope.

“The conflict has evolved into a high-intensity, multi-domain campaign with no immediate end in sight,” the US-based Soufan Center said.

“The conflict has expanded beyond direct military exchanges and conventional strikes and into a regional conflict spanning leadership decapitation strikes, internal destabilization efforts, pressure on maritime chokepoints, attacks or threats to energy infrastructure and economic coercion.”