Admitting a crisis

Politically significant is the fact that the country is the first in the world to declare a state of national energy emergency in response to the Middle East crisis.

By itself, the move by the Marcos administration gives it a year-long legal cover to impose measures to ensure energy stability and protect the broader economy.

In the political sense, the declaration resolves the administration’s dilemma between managing perceptions and frankly stating uncomfortable truths about the effects of the global oil supply crisis on the country.

This becomes clear when other countries, especially our Southeast Asian neighbors, have noticeably chosen to manage perceptions rather than admit the energy crisis outright.

Strategically, deliberately managing perceptions is intended to be a form of psychological containment, with the strategic point, as a trading analyst observed, being that “declaring an actual oil crisis — even if factually accurate — risks triggering a deeper psychological spiral that could cascade across the entire economy.”

“Consumer confidence would falter, businesses would delay investment, and speculative behavior would intensify, potentially turning a manageable disruption into a self-fulfilling prophecy of scarcity and panic,” the analyst said.

Admitting a crisis, in short, can be as damaging as the crisis itself.

But while managing perceptions is not necessarily about incompetence, it’s also similarly risky as declaring a crisis, especially now in the face of the shocking fuel prices.

A fact embarrassingly shown by the Palace’s oracular pronouncement a day before the emergency declaration that there wasn’t as yet a “crisis;” which quickly prompted derisive howls and heavy-handed denunciations that the administration denied realities.

Denying the energy crisis, therefore, deepened the very psychological instability that the management of perceptions intended to prevent.

At any rate, it now seems the emergency declaration somewhat preempted or blunted criticisms of this administration’s credibility and competence.

Whether or not such status stands as the energy crisis deepens and affects the economy, people’s livelihoods and politics remains to be seen — though Mr. Marcos Jr. confessedly still has remaining potent political weapons if things go out of hand.

As it is, the intriguing political point is that this administration now believes it stands to gain more politically by openly declaring an emergency.

Still, the energy crisis also dramatically showed that our current bleak circumstances couldn’t but force the Marcos administration to admit the energy crisis.

Unlike, for instance, our Southeast Asian neighbors, the country hasn’t any active weapons like fuel subsidies or strategic fuel reserves to either keep fuel prices down or put price caps.

Thailand, Vietnam, Malaysia and Indonesia all have existing fuel subsidies which allow them to politically cushion the rising fuel prices.

In our case, we have to deal with the legal constraints of the 1998 Oil Deregulation Law, which basically removed the government’s power to control fuel prices.

“We are constrained by the law and the deregulation that we do not have the powers to cap or to control the prices unless maybe they give us the authority or an amendment of the law, or emergency powers,” Energy Secretary Sharon Garin said last week.

There are now loud calls to entirely scrap the deregulation law, with Senate President Tito Sotto demanding a total repeal.

Discrediting the law now largely focuses on the unnerving fact that it failed to take into account that resonating geopolitical events like the ongoing Middle East conflict, rather than purely market forces, now primarily drive global oil supplies and demand, which has left many countries defenseless against an energy crisis.