The government must consider mandatory fuel rationing to conserve oil and prevent supplies from depleting, as oil prices are expected to further spike in the months ahead, which could push the country’s inflation rate beyond 6 percent in April, an economist said Monday.

Alexander Escucha, president of the Institute for Economic Development and Econometric Analysis, expressed reservations about Energy Secretary Sharon Garin’s assurance that the country still has a “steady supply” of fuel until the first week of May despite global supply disruptions.

He argued that the administration should implement “proactive” measures, such as fuel rationing, well before the supply runs out, noting that the Philippines is the “most vulnerable” to oil supply shortages among ASEAN neighbors.

"I don't want to sound alarmist, but compared to all ASEAN countries, we are one hundred percent dependent on oil imports. So we have no choice there," he said, partly in Filipino in a radio interview.

About 95-98 percent of the country’s oil imports are sourced from the Middle East, which is hard hit by the ongoing United States-Israel war on Iran. 

Last week, Garin shrugged off the need for fuel rationing despite challenges some oil firms faced in sourcing a supplier. 

The Philippines had already rationed fuel during the oil crisis in 1973, triggered by the Organization of Arab Oil Petroleum-Exporting Countries’ proclamation of an oil embargo against countries supporting Israel in the Yom Kippur War. 

Escucha asserted that “severe reduction” of fuel supplies is “highly likely” and that the government should not be complacent about its so-called steady stocks.

Unlike Malaysia, which has PETRONAS, a state-owned multinational oil and gas company, the Philippines is not well-positioned to withstand the looming threat of a supply shortage, according to Escucha.

“[The government] should be more prudent or better prepared, if it were to say that now, we should already tighten our belts. In other words, prepare for possible rationing,” he stressed, adding that public transport should be prioritized.

Escucha, however, expressed confidence that the ongoing oil crisis will not escalate into another lockdown, as seen during the Covid-19 pandemic. 

"The analysis is that even if the war stops this week, because production at oil refineries has stopped and the liquefied gas facilities of Qatar and Iran have been damaged because they are sharing the same gas mill, restarting all of this will easily take four weeks to three months,” he warned. 

As of the weekend, indicators suggest that Dubai crude oil could climb to P$155 per barrel, triggering another price shock. 

As for inflation, Escucha said the government should brace for an uptrend, possibly reaching above 6 percent starting in April, from 2.4 percent in February.