A Senate ad hoc committee, formed to develop contingency plans for the looming oil supply shortage brought about by the Middle East crisis, is urging the Department of Energy (DOE) to mimic other countries’ strategy and start preparing a fuel rationing framework to conserve and extend the buffer stock, as the Philippines still grapples to find a long-term alternative supplier ahead of the anticipated scarcity. 

The proposal was under the preliminary report by Senate proactive response and oversight for timely and effective crisis strategy (PROTECT) committee chairperson Sherwin Gatchalian released on Wednesday, following two hearings.

The move aims to stretch the average fuel inventory from the current 51 days, or until 17 May,  to “another 90 days or even longer,” amid global supply disruption and relentless price hikes, according to the chair. LPG supply, a primary energy source for cooking in every household and restaurants, has the shortest at 34 days. 

“To extend the number of days, let's prepare for rationing. In fact, if we still cannot secure more than 10 days, my advice is to ration [fuel] for non-essential services,” Gatchalian said in a virtual briefing. 

“We should not wait until gasoline and diesel are almost depleted,” he added. 

Fuel rationing shall be imposed, especially for non-essential services, like leisure, while ensuring uninterrupted supply for essential services such as ambulance, firefighting units, police, operations, and the Philippine Coast Guard’s routine patrols and other forms of defense.

Phl done it before

Some economists have also stressed the need for the government to consider mandatory fuel rationing as early as March to prevent supplies from further depleting. This is primarily because the Philippines is the “most vulnerable” to the global oil supply disruption compared to its ASEAN neighbors, because it imports 95 to 98 percent of its oil from the Middle East.

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. 

However, despite the challenges of some petroleum firms in scouting an alternative oil supplier, DOE Chief Sharon Garin remains dismissive of the proposal. 

Under the DOE Act (RA 7638), the Energy secretary is empowered to formulate fuel and energy conservation in times of critically low-energy supply. This is through fuel rationing, load curtailments, and restrictions on the use of government vehicles and resources.

Citing data from the DOE as of 27 March, the preliminary report states that fuel rationing could significantly extend the country’s fuel run-out date in worst-case scenarios where fuel shipments to the Philippines and domestic refining of petroleum products cease.

For instance, if no more fuel arrives, and only crude oil is used for domestic refining until 30 June, cutting daily demand through rationing could stretch the supply until year-end, based on its estimate. 

In a worst-case scenario, where there is no crude oil available for domestic refining and no fuel shipments, daily demand would be reduced by as much as 81.7 percent, allowing supplies to last until the end of the year. 

“While it may not yet be necessary to impose such severe rationing requirements under present circumstances, the DOE may consider implementing a more modest rationing regime based on the country’s ability (or inability) to secure future shipments of petroleum products,” the preliminary report reads. 

As this developed, Garin and Foreign Affairs Secretary Ma. Therese Lazaro met Iranian Ambassador to Manila Yousef Esmaeilzadeh on Wednesday, following a directive from Malacanang to ensure the safe passage of Philippine-bound oil through the Strait of Hormuz. 

However, the DFA remained mum on the developments of the discussion.

Price cap, supplementary budget, too

The report also contains other observations and recommendations to address the socioeconomic crisis and prevent stagflation of the economy, which shall be submitted and approved by the Senate as a body.

This includes imposing a price cap on petroleum products as a “last resort.”

Garin earlier said that the DOE cannot control pump prices because the oil industry is deregulated under the Oil Deregulation Act (RA 8479), which liberalized the downstream industry and removed government control over the pricing, importation, and export of petroleum products to promote free competition.

The successive big-time oil price hikes amid the supply disruption have prompted lawmakers from both houses of Congress to seek to repeal RA 8479, though President Marcos Jr. remains reluctant to the proposals. 

According to Gatchalian,  the outcome of the committee report will be translated into legislative measures, such as, among others, amending RA 8479, or passing a supplementary budget or Bayanihan 3 Act to cushion the socio-economic impact of the oil supply shortage.

The paramount need for supplemental budget is to bridge the funding gaps in this year’s General Appropriations Act, in light of the unforeseen oil crisis.

For instance, the fuel subsidy for PUV drivers and operators under the Pantawid Pasada Program would need approximately P7.6 billion to P61 billion in additional funding for the beneficiaries to continue their operations amid soaring fuel prices. 

Initial computation pegged the supplementary funding at P400 billion under the ”worst-case scenario,” or when oil supplies have completely stopped in a prolonged war, according to the chair.

Malacanang and the DOE were furnished a copy of the preliminary report, as well as other line agencies, such as the Departments of Social Welfare and Development, Transportation, Agriculture, and Economy, Planning, and Development, pursuant to the rules.

Senators do not yet have a say in the document in question, although the contents merely came from their initial recommendation during the hearing, Gatchalian concluded.