The oil shock could be worse than Covid

There is a dangerous tendency in government – and, frankly, in the public – to assume that every crisis can be managed the way we managed Covid-19.

It cannot.

Covid was brutal, yes. It shut down economies, overwhelmed health systems and forced governments into extraordinary measures. But for all its devastation, it was still a crisis with “controllables.”

We had tools. We could impose mobility restrictions. We could test, isolate, vaccinate and spend our way through the emergency. We could intervene directly and shape the outcome.

The oil market does not care about any of that.

You cannot quarantine a barrel of crude. You cannot vaccinate against a supply disruption. You cannot hold a press conference and expect global energy prices to behave.

And yet many still speak as if this is just another episode of “temporary inflation” that will somehow sort itself out if we all stay calm and use fewer air-conditioners.

That is not a strategy. That is wishful thinking dressed up as policy.

Let us be clear about the problem.

The real danger is not simply that oil becomes expensive. The real danger is that supply becomes tight enough that fuel is either unaffordable or, worse, unavailable.

That is when the real trouble begins.

When fuel prices spike, people complain – and rightly so. But when fuel cannot be secured in sufficient quantities, economies do not merely slow down. They begin to seize up.

Trucks do not move. Food does not arrive on time. Agricultural inputs do not reach farms. Factories cannot plan production. Public transport becomes erratic. Supply chains become fragile. Inflation stops being a statistical inconvenience and becomes a daily punishment for ordinary households.

And for an import-dependent country like the Philippines, this is not a theoretical exercise. We are not Norway. We are not Saudi Arabia. We do not have the luxury of pretending we are insulated from external shocks just because we would like to be.

So let us stop pretending.

If the global energy market deteriorates further, the Philippines will not be saved by optimism, hashtags or another inter-agency meeting with a nice PowerPoint presentation.

What is needed is preparation. Serious preparation.

First, the country needs strategic reserves – not someday, not after another “comprehensive review,” but now.

We should already be identifying how much fuel, food, pharmaceuticals, fertilizers and other essential inputs we can physically stockpile and where we can store them. If existing depots are insufficient, then use alternative storage. Lease tankers if needed. Rent space. Secure supply while supply can still be secured.

Because if the country waits until everyone is scrambling for the same barrel of oil, we will discover, rather late, that “market solutions” are very elegant in theory and very useless when there is nothing left to buy.

Second, we need to reduce demand.

This is the part governments usually avoid because it is inconvenient and politically unattractive. But supply shocks are not impressed by political discomfort.

A real conservation program means exactly that: conservation. The government should begin with itself. Official fleets, non-essential travel, fuel-intensive operations and wasteful public consumption should all be reviewed immediately. Large private users should also be pushed to adopt efficiency measures.

If there is a shortage, the country does not need slogans about resilience. It needs fewer unnecessary trips, less waste and more discipline.

Third, this cannot be left to one department pretending to be in charge while everyone else waits for a memo.

This requires whole-of-government coordination with actual authority behind it. Energy, finance, trade, agriculture, transport, interior, defense and local governments must operate under one coherent contingency framework. Local governments should already be identifying which communities are most vulnerable to supply disruptions and what local fallback systems can be activated if normal distribution channels fail.

Because if the national plan is “we’ll cross the bridge when we get there,” then I have unfortunate news: by then, the bridge may not have fuel either.

Fourth, the private sector must be integrated into crisis planning now.

Fuel distributors, food suppliers, logistics operators, major retailers, banks and large manufacturers are not spectators in this story. They are part of the operating system of the economy.

We need a localized and unified front where local government units (LGUs) organize their communities for grassroots resilience, while the national government convenes major business organizations like the Philippine Chamber of Commerce and Industry to synchronize resources.

If the government and business are not sharing information, aligning contingency plans and preparing distribution priorities in advance, then we are not preparing – we are improvising.

And improvisation is expensive.

Fifth, financial stability must be protected with the same seriousness as physical supply.

A prolonged fuel shock will not remain confined to gas stations. It will hit inflation, transport costs, production costs, household budgets, business margins and credit conditions. Government financial institutions like the Land Bank of the Philippines and the Development Bank of the Philippines must be prepared to provide support where necessary and ensure that a supply shock does not metastasize into a broader credit and confidence problem.

This is where competence matters.

Because once panic enters the market, it does not politely wait for the next policy meeting.

Finally, the state must be prepared to maintain order and continuity. That means using all available public assets including, if necessary, uniformed personnel to support logistics and protect the movement of essential goods.

That is not overreaction. That is what governments are for.

Covid was fought in hospitals, laboratories and vaccination centers. This one will be fought in ports, warehouses, fuel depots, transport corridors, farms, banks and distribution networks.

And unlike Covid, there is no vaccine coming to save us.

Only preparation will.

The hard truth is that this may be a more unforgiving crisis than the pandemic not because it is more dramatic, but because it is less controllable. During Covid, governments could at least pretend they had the steering wheel. In an oil shock, many countries will discover they are passengers.

The question is whether we intend to be prepared passengers or helpless ones.

Because if we continue treating this as just another temporary inconvenience, the market will eventually educate us.

And it will not be a cheap lesson.

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Carlos Dominguez served as finance secretary from July 1, 2016 to June 30, 2022, leading the Department of Finance through the Covid-19 pandemic.