How the Iran war is pushing US ally the Philippines into economic crisis

Lead

The Iran war, though fought thousands of miles away, has sent fuel prices in the Philippines soaring to levels that have emptied Manila's streets of traffic and pushed the country's iconic jeepney drivers to the brink. As the conflict between the US, Israel, and Iran continues, the Philippines—one of Asia's most import-dependent economies—finds itself in the crosshairs of a global energy crisis.

Coverage Comparison

Two regional news outlets, ABC Australia and the South China Morning Post, have chronicled the unfolding crisis, each with a distinct focus. ABC Australia's reporting centers on the human toll, featuring personal stories of drivers like Eddie Ramos, a 53-year-old jeepney driver who says his daily earnings barely cover fuel costs. The outlet emphasizes the emotional and practical hardships faced by ordinary Filipinos, describing fuel prices as "astronomically high" and the situation as an "existential threat."

The South China Morning Post, by contrast, takes a more analytical approach, focusing on government response and economic policy. It highlights consumer groups' demands for bolder action and economists' recommendations for tax relief, targeted subsidies, and transport support. The SCMP also quotes the Philippines' energy secretary, Sharon Garin, who warned that diesel prices may never return to pre-war levels due to structural damage to Gulf facilities.

Key Claims

• Fuel prices among the world's hardest hit: Both outlets report that the Philippines has been disproportionately affected by the Iran war's impact on oil prices. The country imports nearly all of its oil from the Persian Gulf, making it especially vulnerable to supply disruptions. According to ABC Australia, diesel prices in Manila have more than doubled, from 55 pesos per liter before the war to 130 pesos today.

• National energy emergency declared: The Philippine government has declared a national energy emergency in response to the crisis, as reported by ABC Australia. This measure underscores the severity of the situation, which has forced motorists off the roads and left bus stops crowded and chaotic.

• Jeepney drivers on strike: Jeepney drivers, who operate the country's low-cost public transport, have gone on strike to protest the government's response, calling for lower fuel prices. ABC Australia's report features drivers like Eddie Ramos, who fears he may lose his home if prices continue to rise.

• Long-term energy concerns: Energy Secretary Sharon Garin stated on a radio program that diesel prices may never return to 60 pesos per liter, citing structural damage to Gulf facilities during the conflict. "If the war had only lasted for two weeks, prices would have gone down. But the structural damage has already been done," she said, as quoted by the South China Morning Post. This suggests the crisis may extend well beyond the immediate conflict.

• Stagflation risk: Economists have warned of the potential for stagflation—a combination of high inflation, sluggish economic growth, and rising unemployment—as the fuel crisis ripples through the Philippine economy. This concern was raised in ABC Australia's coverage, though specific economic projections were not detailed.

• Possible China cooperation: The crisis may also thaw relations between the Philippines and China, with both countries showing interest in joint oil and gas exploration in the South China Sea. ABC Australia noted that this could lead to more pragmatic, limited cooperation, though the claim is speculative and not yet fully developed.

Perspectives

The crisis has elicited varied responses from different stakeholders. Consumer groups are urging the government to take bolder action, including tighter control over pump prices, according to the South China Morning Post. However, economists suggest that direct price controls may be less effective than tax relief, targeted subsidies, and transport support—measures that could alleviate the burden on the most vulnerable without distorting the market.

The government, for its part, has declared a national energy emergency, signaling its recognition of the crisis's severity. Yet, as Energy Secretary Garin's remarks indicate, officials are bracing for a prolonged period of high prices, with little hope of a quick return to pre-war levels.

For the public, the impact is immediate and visceral. Jeepney drivers, who form the backbone of urban transport, are struggling to make ends meet. Their strike reflects a broader frustration with the government's handling of the crisis, even as the root cause lies in a conflict far from Philippine shores.

As the war in Iran continues, the Philippines' energy woes are likely to persist, with potential long-term consequences for its economy and society. The path forward, as economists suggest, may require a combination of short-term relief and long-term diversification of energy sources—a challenge that will test the resilience of this Southeast Asian nation.