Why we must break our dependence on imported oil

What started as a remote geopolitical incident eventually becomes a daily economic burden for Filipino families. The war in Iran has altered the reality in our country, and inside our homes.

Every time oil prices rise, the shock is felt almost instantly in the Philippines. A conflict thousands of miles away, a production cut by major exporters or a disruption in global logistics routes quickly translates into higher fuel prices at the pump. Higher transport fares follow, plus rising electricity costs and more expensive food on the table. The vicious inflation cycle spins in almost all corners of our market.

This phenomenon reveals a stark fundamental weakness in our economy: we remain heavily dependent on imported oil.

Unlike many nations with abundant petroleum resources, the Philippines produces very little of its own crude. Almost all, at least 99 percent, of the fuel that powers vehicles, ships, factories and many power plants must be purchased from abroad. That dependence leaves the country exposed to uncontrollable external forces.

When geo-political tensions erupt in major oil-producing regions, the effects ripple across the globe. Decisions by major oil producers such as OPEC, disruptions in supply routes or conflicts in energy-rich areas can send prices sharply upwards. For countries that produce their own oil, such fluctuations are manageable. But for the Philippines, they immediately mean higher import bills and increased economic pressure.

The impact goes beyond higher fuel prices. Oil imports represent a significant portion of the country’s total import expenditures. Around 15-16 percent of our total importations are petroleum products. When oil prices rise, we must spend more dollars simply to maintain a stable energy supply. Over time, the demand for more dollars to pay for the imported fuel can make our peso more expensive as well.

The result is a chain reaction that affects nearly every sector of the economy. Transportation becomes more costly. Food distribution becomes more expensive. Manufacturing and logistics face higher operating expenses. In the end, the ordinary Filipino consumer absorbs much of the burden.

Yet despite this vulnerability, the country has not fully pursued the long-term solutions that could reduce its dependence on imported oil. The Philippines is actually rich in alternative energy sources. It has vast potential in solar and wind power, abundant geothermal resources and favorable conditions for hydroelectric generation. These natural advantages provide an opportunity to build a more stable and resilient energy system.

In fact, the Philippines has long been recognized as one of the world’s leading producers of geothermal energy. These resources alone demonstrate that we have the capacity to develop reliable domestic energy sources. Expanding renewable energy investments could significantly reduce reliance on imported fossil fuels while also helping stabilize electricity costs. As of 2025, around 78 percent of our energy sources are from oil and coal.

Another important step is the gradual electrification of transportation. Public transport systems, government vehicle fleets and eventually private vehicles can shift toward electric technology. As renewable energy expands, electric mobility would allow the country to reduce its dependence on imported gasoline and diesel.

Equally important is the development of strategic petroleum reserve. Many countries maintain an emergency oil stockpile that can be released during supply disruptions or sudden price spikes. Such a reserve would provide the Philippines with a buffer during global crises and give policymakers time to respond without immediately passing the full burden to the consumers. The current chief of the Department of Energy, Secretary Sharon Garin, definitely has set her goal on achieving these. She is known to be competent and focused on her serious pursuit of solutions to our energy challenges.

Ultimately, energy security is closely tied to economic stability. A country that relies heavily on imported fuel will always remain susceptible to global market volatility. Each geopolitical conflict, production cut or shipping disruption becomes a potential shock to the economy.

Breaking this dependence will not happen overnight. It requires sustained investments, consistent policy direction and a clear national commitment to energy diversification. But the alternative –remaining permanently exposed to every surge in global oil price – is far more costly.

The question, therefore, is no longer whether the Philippines should reduce its dependence on imported oil – but how urgently it is willing to act.

The lesson is clear. Energy security is not simply an environmental aspiration. It is an economic imperative. The sooner the Philippines builds an energy future powered more by its own resources than by imported fuel, the sooner it can shield its economy and people from the unpredictable shocks of the global oil market.

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Email: arielnepo.philstar.com