The national emergency EO and cautions on some provisions

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President Marcos issued Executive Order (EO) 110 titled “Declaring a State of National Energy Emergency and Authorizing the Unified Package for Livelihoods, Industry, Food and Transport” (UPLIFT) last Tuesday, March 24.

Many provisions of the EO are good and worth supporting, like promotion of energy conservation, action against hoarding, profiteering, and supply manipulation of petroleum products.

But some provisions of the new EO may be counter-productive. I see at least three.

One, “Formulate longer-term demand-side solutions and strategies to decrease consumption of petroleum products… including accelerating the transition to renewable energy through the use of electric vehicles in mass transport, integration of renewable energy in agriculture, logistics and manufacturing” (Section 4e).

Two, “Adoption of appropriate regulatory measures in the operation of the Wholesale Electricity Spot Market (WESM), including the possible suspension of market operations or the declaration of a temporary market failure” (Section 5g).

Three, “Provide support for the public transport sector through… fuel subsidy allocations and commuter fare subsidies” (Section 6ai).

To provide context why I said the above may be dangerous, consider the following movement in prices and rates, from Feb. 27 (a day before the attack on Iran) to March 24, unless indicated, and percent increase or decrease.

A. Energy: Dubai crude oil in $/barrel,  68.4 to 131.97 (March 23), 92.9 percent.

Coal in $/ton, 118.5 to 140.4 (March 23), 18.5 percent.

JKM LNG in $/mmbtu, 10.72 to 20.52, 91.4 percent.

Wind index in $, 24.47 to 23.70, -3.1 percent.

Solar index in $, 54.60 to 55.10, 0.9 percent.

B. Fertilizer related: Urea in $/ton, 465.5 to 670.5, 44.0 percent.

Sufur in CN yuan/ton, 3,877 to 5,183, 33.7 percent.

C. Philippine indicators: Exchange rate in P/$, 57.71 to 60.09, 4.1 percent.

PSEi stock market index, 6,611 to 5,936, -10.2 percent.

Government 10-year bond yields in percent, 5.92 to 7.11, 1.19 percentage point.

Implications of the above numbers on the three provisions of EO 110.

On (1) “acceleration to RE,” it is not happening until now, there is zero attractiveness of wind-solar as substitute or alternative to hydrocarbons as shown by their flat index. The alternatives to Middle East oil-gas are North America or Russia or East Asia oil-gas. That is why when Dubai or Saudi oil prices are high, WTI (US), Brent (Europe), Urals (Russia) oil prices are also high. Oil is a necessity, like food, water and air.

On (2) “possible suspension of market operations/WESM,” meaning more electricity price control, frequent invocation of secondary price cap of P7.42/kwh. But coal that provides 60 percent of total electricity in the Philippines, prices have increased. Indigenous Malampaya gas prices (pegged at Dubai crude oil prices) will increase, imported LNG prices have increased.

If overall power generation cost goes up to say P10-11/kwh but government will impose price control of P7.42/kwh, then many people will not conserve, electricity demand will remain high while supply will shrink as power producers are losing money, this will lead to blackout. And the most expensive electricity is no electricity, blackout.

On (3), fuel subsidy for public transportation, fare subsidy while excluding subsidy for  farming-fishing related machines (tractors, harvesters, irrigation pumps, trucks, fishing boats, etc.). Then rising prices of urea, phosphate and other fertilizers that use sulfur and ammonia as inputs are rising. So high diesel prices for tractors and harvesters, high fertilizer prices for crops mean high food inflation.

If government will expand subsidy to agri-fishery machines and people, then borrowings will further increase, interest rates will further increase on already steep rise in government bond rates as we are expanding spending on money we do not have.

Our outstanding public debt as of January 2026 is P18.13 trillion. Even if new borrowing for the rest of the year is zero, at seven percent interest rate our public debt will rise to P19.39 trillion by January 2027, the increase of P1.26 trillion is for interest payment alone.

Other policy measures that the President may consider would be the following.

One, policy signal that Philippines will explore and develop more oil-gas-coal, that we embrace fossil fuels and not demonize them. No subsidy nor taxes for these products needed. Accelerate our hydrocarbons development, not more RE expansion.

Two, expand diplomatic relationship with China to develop more offshore oil and gas. The President has already announced that the Middle East war and oil-gas price shocks are “impetus for both sides to come to an agreement,” referring to China on joint oil-gas exploration in the South China Sea.

Three, avoid new subsidies on top of existing subsidies funded by borrowings, avoid war mongering and war preparations on money we do not have and to be funded by borrowings. Cut or remove current oil taxes that distort prices upwards. And abolish old subsidies before creating new subsidies and freebies.

Four, instruct the DILG and MMDA, meet with city mayors to suspend number coding with penalties. High gasoline-diesel prices are enough reason for people to leave their cars for non-important trips. More fines and penalties by government on non-criminal activities tend to create more public animosity against government, non-support for its programs and policies.

Five, limit if not cancel government officials’ foreign and domestic trips and meetings  related to anti-fossil fuel and climate narratives. We need more fossil fuels, not less. The really dirty energy are candles for lighting and animal manure for cooking.

We need many by-products of oil, from nylon in our clothes, paint for our bicycles and houses, synthetic rubber for our slippers and vehicle tires, chemicals and packaging for our medicines, and so on. Ammonia for fertilizers, natural gas is an important input. Coal produces electricity and coal ash is used in cement production.