Temporary challenge: Fuel price shock may spur structural shifts - Expert

CEBU, Philippines — A surge in global fuel prices is set to drive up transport costs and stoke inflation risks in the Philippines, but economist and licensed environmental planner Prof. Ronilo Balbieran said the shock may prove temporary and could even hasten structural shifts in investment and business operations.

Speaking at an economic briefing hosted by the Mandaue Chamber of Commerce and Industry (MCCI) titled “Navigating the Middle East Crisis and Its Impact,” Balbieran said the latest spike in oil prices driven by geopolitical tensions in the Gulf reflects cyclical supply-demand adjustments rather than the onset of a prolonged economic crisis.

“This is a temporary challenge,” he said, explaining that, “when prices rise, suppliers find ways to bring more oil to market, while consumers adjust by reducing demand or shifting to alternatives.”

Winners and Losers

Higher fuel costs are already squeezing transport and logistics operators, where fuel can account for up to 70 percent of operating expenses. Some long-haul trucking services have slowed or halted operations while seeking approval for fuel surcharges.

But other sectors stand to benefit. Balbieran noted that rising oil prices could accelerate adoption of electric vehicles (EVs), hybrid logistics fleets and energy-efficient technologies — trends that could reshape supply chains over the medium term.

“There are losers and gainers,” he said. “Some industries will suffer in the short run, but others are already seeing new opportunities.”

April Risk Window

Balbieran flagged April 15 as a critical point for the country’s fuel supply outlook. Delays in tanker shipments caused by geopolitical tensions could temporarily tighten domestic inventories. Conversely, if shipments resume simultaneously, the country could face a logistical bottleneck as storage depots struggle to absorb sudden deliveries.

In that scenario, fuel prices could fall later as supply normalizes, potentially leaving companies that invested heavily in electric fleets with excess capacity.

“This is a good problem to have,” Balbieran said. “It signals adjustment — a rearranging of our economy.”

Dollar Reserves Offer Cushion

Despite the external shock, Balbieran said the Philippines’ strong dollar reserves provide a buffer against prolonged crisis. The country holds import cover well above the three-month benchmark often used by economists to assess financial resilience.

“When we have sufficient dollar reserves, we are okay,” he said. “Economic crises typically emerge when nations run out of foreign currency to finance imports.”

He added that global uncertainty remains elevated, but current levels are still lower than peaks seen during recent trade tensions and the pandemic.

Bigger Concern: Infrastructure Spending

Balbieran warned that domestic factors may pose a greater threat to growth than fuel prices. He pointed to weak public infrastructure disbursements as a key reason Philippine GDP slowed to 4.4 percent, below government targets.

The construction sector, which has one of the highest multiplier effects in the economy, contracted sharply in recent quarters due to delayed project implementation.

“If I were to be worried about the economy, I would be more concerned about infrastructure spending than oil prices,” he said. “Government investment drives private investment and job creation.”

Outlook: Short-Term Pain, Structural Shift

Balbieran expects the fuel shock to trigger strategic adjustments across industries, from equipment purchases to diversification of energy sources.

While inflation pressures may weigh on low-income households, the broader economy remains supported by strong consumption, remittance inflows and demographic advantages.

“Filipinos are resilient,” he said. “In the short and medium term, we can still grow faster. The key is to adapt and take advantage of emerging opportunities.”

Like other economists, Balbieran believes that the coming months will test the country’s ability to manage external shocks while sustaining domestic investment — a balancing act that could determine whether the current fuel surge becomes a crisis or a catalyst for transformation. — (FREEMAN)