Iloilo governor says fuel subsidy not possible amid budget crunch

By Mariela Angella Oladive

Iloilo Gov. Arthur Defensor Jr. said the provincial government cannot afford to implement a fuel subsidy because of limited funds as global oil prices continue to fluctuate.

In a March 9 interview, Defensor said providing direct fuel assistance to affected sectors would require substantial financial resources that the province currently does not have.

“We cannot afford it [fuel subsidy to the affected sector] right now with the budget we have,” he said.

Defensor recalled that during the oil crisis under former President Ferdinand Marcos Sr., the national government used the Oil Price Stabilization Fund to cushion the impact of global price spikes.

The OPSF was a government mechanism that absorbed fluctuations in global oil prices by subsidizing domestic fuel costs, effectively shielding consumers from sudden price increases.

He said the mechanism was later removed following the enactment of the Downstream Oil Industry Deregulation Act of 1998, or Republic Act 8479, which opened the petroleum industry to more private players to encourage competition and lower fuel prices.

The law effectively ended government control over fuel pricing in the Philippines, shifting to a market-driven system where oil companies set pump prices based on global crude oil costs and other market factors.

“Adding more players was supposed to bring prices down, but it didn’t work,” Defensor said.

The governor added that the policy framework governing the oil industry should be reviewed at the national level to determine whether reforms are needed.

Despite the provincial government’s financial constraints, Defensor acknowledged that subsidies remain one of the fastest and most practical ways to mitigate the impact of rising fuel prices if sufficient funds are available.

He urged the public and government agencies to prioritize energy conservation while exploring other measures to manage fuel consumption and soften the economic effects of rising oil prices.

“Conservation is important, and we also have to think of other ways — by all means necessary,” Defensor said.

Motorists in Iloilo braced for another round of fuel price hikes after retailers implemented increases on Tuesday, March 10.

The adjustment marked the ninth straight week of gasoline price increases and the 11th consecutive week of hikes for diesel and kerosene amid continued tensions affecting global oil supply.

According to the Department of Energy, gasoline prices rose by PHP 7 to PHP 13 per liter, diesel by PHP 17.50 to PHP 24.25 per liter, and kerosene by PHP 32 to PHP 38.50 per liter.

The price movements are largely driven by escalating tensions between the United States and Iran, which have disrupted shipping through the Strait of Hormuz, a critical chokepoint through which roughly 20 percent of the world’s oil supply passes.