The Philippines just became the first country to officially declare a national energy emergency due to the Iran war, and the scenes on the ground look like something out of the 1970s.
President Ferdinand ‘Bongbong’ Marcos Jr. declared a state of emergency on March 24 after officials warned of « imminent danger from extremely low energy supplies. » The country’s fuel reserves had dropped from 55-57 days to 45 days in less than a month.
The government began emergency fuel purchases and cracked down on hoarding, and is now asking Washington for permission to buy oil from countries under sanctions, possibly including Iran and Venezuela. The Philippines’ ambassador to Washington told Reuters the effort was « a work in progress. » (1)
The government gives 5,000 pesos — about $83 — to motorcycle taxi drivers and provides free bus rides for students. In an interview with Bloomberg Television, Marcos said the suspension of commercial flights is a « distinct possibility, » noting that several countries have already told Philippine airlines they cannot refuel their planes. (2)
Energy Secretary Sharon Garin said the country would « temporarily » rely more heavily on coal – which already generates about 60% of the Philippines’ electricity – and could increase production as early as April 1. Indonesia has assured Manila that there are no restrictions on coal orders.
The Philippines is not alone. In the Asia-Pacific region, the Strait of Hormuz crisis is forcing governments to take emergency measures not seen in decades.
In South Korea, the government imposed a fuel price cap for the first time in about 30 years and launched a 100 trillion won ($66.5 billion) market stabilization program, with another 25 trillion won in an emergency budget headed to the government on March 31. The country imports about 70% of its Middle East crude oil and 20% of its ministerial and natural gas. « worst case scenarios » if the conflict continues. (3)
The regulation is already down to the details. Public sector vehicles are now banned from the road one day a week based on the last number on their license plates. About 1.5 million vehicles are affected. (4)
Samsung employees face parking restrictions on days that match their license plate number. KB Financial and Hyundai advised employees of their subsidiaries not to drive to work. The government cut natural gas production by 20%, allowed coal-fired power plants to run at full capacity, and is rushing to restart nuclear reactors. (5)
Experts warn of ‘April supply crisis’ – chemical shortage could end production of plastic food packaging, including snack and noodle packaging.
Meanwhile, dozens of Buddhist monks from Seoul’s Jogye Order marched to the U.S. Embassy to protest the war, with 26 performing full-body prostrations along the route. (6)
Hundreds of millions of people in India cook with gas – LPG, or liquefied petroleum gas. More than half of it is delivered through Hormuz. (7) When the strait closed, panic buying began within days. Residents of several cities had to line up at 3 a.m. for gas cylinders. (8) Restaurants in Jaipur removed samosas from their menus. In Mumbai and Delhi, dosas disappeared from restaurant kitchens. A crematorium in Pune suspended gas-based cremations. (9) Low-income households returned to using firewood. The government declared a state of emergency and increased domestic LPG production by 28% in five days. (10)
Japan released 80 million barrels of strategic assets — the largest release since the system was created in the 1970s. (11) It covers about 45 days. Tokyo is pressing the International Energy Agency to release more reserves (14), and at least one major refinery has canceled fuel exports to prioritize domestic supply. More than 90 percent of Japan’s crude oil imports come from the Middle East, so analysts warn that reserves will not last if the crisis drags on.
New Zealand announced a four-stage fuel rationing plan that resembles its former Covid warning levels. (12) China and Thailand both banned fuel exports to shore up domestic procurement.
Iran now selectively allows allied countries – China, Russia, India, Iraq, Pakistan, Malaysia and Thailand – to pass through the strait and charges tolls in yuan. (13) The Philippines, a US treaty ally, is not on that list.
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President Trump has argued that the closure of Hormuz « really doesn’t affect » the United States. (15)
« It isolates us in the sense that we’re not going to have trouble finding supply, but prices are global, so prices are going to go up anyway, » Abhi Rajendran, director of oil market research at Energy Intelligence, told FactCheck.org.
The national average for a gallon of regular gas was $3.98 at the end of March, according to AAA (16) — up a dollar from January. In Los Angeles County, the average was $5.97 on March 28, up $1.28 from a month ago. (17) Diesel has already surpassed $5 a gallon nationwide, and that’s a price that vibrates through everything — it runs in trucks, trains, and farm machinery behind every product on every shelf.
According to the Stanford Institute for Economic Policy Research, if crude oil averages $110 a barrel, gas prices could rise to $4.36 a gallon by May. Black Rock’s Larry Fink broke down the nightmare scenario of a war driving crude oil prices past $150 a barrel for years.
The price of jet fuel has risen by about 85%, which affects everyone who books Spring Break or summer flights. (19) About one third of the fertilizers sold worldwide pass through the strait. (20) This price will be visible in grocery store aisles months from now. And Americans use more than four times more new plastic than the global average, making households more vulnerable to disruptions in plastic supply chains.
At the CERAWeek energy conference in Houston this week, Shell CEO Wael Sawan warned that fuel shortages spreading across Asia will reach Europe by April. (18) Energy veteran Paul Sankey compared the situation to the Arab oil embargo of 1973 – the worst disruption he has seen in his career, which began at the IEA in 1990.
No. America produces more oil than any country on earth and has an abundance of natural gas. It does not face an existential supply crisis that would force the Philippines to dismantle coal plants, South Korea to restart mothballed nuclear reactors, or India to ration kerosene. The lights stay on.
But that difference is cold comfort at $4 a gallon — or $6 in California. The crisis facing America is not about keeping the lights on. It’s about the price of everything, from gas to groceries to flights, and it’s determined by a global market that just lost a fifth of its supply.
The return of coal is an Asian story. The shock wave of inflation affects everyone. And every week the strait remains closed, that wave is harder to pass.
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Reuters (1); Bloomberg (2); CNBC (3, 18); Anadolu Agency (4); Seoul Economic Daily (5); Yonhap News Agency (6); NPR (7); CNN (8, 13); Mongabay India (9); Press Information Bureau, Government of India (10); Japan Times (11, 14); RNZ (12); FactCheck.org (15); AAA (16); MyNewsLA (17); Time (19); Atlantic Council (20)
This article provides information only and should not be considered advice. It is supplied without any warranty whatsoever.
