ASEAN Beat | Economy | Southeast Asia

Philippines Approves Shift to Dirtier Fuels as Oil Supply Crisis Bites

The country has experienced some of the sharpest increases in the price of petrol and diesel since the beginning of the Iran war.

A Petron petrol station in Puerto Galera, Philippines, May 21, 2021.

The Philippines has announced that it will permit the use of dirtier petroleum products in a bid to conserve domestic petrol supplies amid the continuing global supply crisis prompted by the war in the Middle East.

On Saturday, the Philippine Department of Energy (DOE) announced that it would temporarily permit the limited use of Euro-II petroleum products in order to help conserve supply.

The DOE said that these dirtier fuels – the Philippines adopted the lower emission Euro-IV standard in 2016 – would be limited to in-use vehicle models from 2015 and earlier, traditional jeepneys, industrial applications such as power plants and generators, and the marine and shipping industry. Euro-II standard fuels have 10 times the sulfur content of Euro-IV fuels.

“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,” Energy Secretary Sharon Garin said in a statement. “This interim authority is subject to strict quality controls, clear notification requirements, and appropriate consumer protection measures.”

The announcement came as diesel breached the triple-digit mark for the first time ever earlier this week, and the DOE warned that prices could rise as high as 114 pesos ($1.90) per liter. As the South China Morning Post (SCMP) reported, “The price surge forced some petrol stations to improvise after the figures exceeded the two-digit capacity of their digital display systems.”

The Philippines has experienced some of the sharpest rises in fuel prices in the region since the start of the Iran war on February 28. As Carlo Asuncion, chief economist at the Union Bank of the Philippines, told the SCMP, this is due in part to the country’s limited domestic refining capacity, which “means local prices quickly reflect movements in global crude and refined product markets.” It is also partly a result of the 1998 Oil Deregulation Law, which removed the government’s power to set fuel price caps, exposing Philippine consumers........

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