The twin torments: Oil and the peso

The Filipino is being squeezed from both ends again. At the pump, prices defy logic. In our pockets, the peso buys less and less. This is not new, but it is more dangerous now because the two maladies have come together.

Historically, Brent crude, the global benchmark, hit its all-time high of $147.02 per barrel on July 11, 2008. In the country, the peak was not 2008 but 2022 when Russia invaded Ukraine. Then (2022), pump prices for both gasoline and diesel breached the P80 per liter level.

For the peso, we are living through the worst. On September 11, 2026, the peso slumped to a new all-time low of P62.68 against the US dollar, breaking the previous record of P62.625. To put that in perspective, we already thought the bottom was when the peso closed at P60.10 vs dollar, weakest level in history, surpassing the prior record of P59.87 on March 16.

Why is oil unhinged? There is no single reason for it. It is a pile-up. OPEC+ has kept supply deliberately tight. The US-Iran-Israel shadow war in the Strait of Hormuz threatens 20% of global supply. The protracted Ukraine war has structurally rerouted diesel. Add a strong US dollar that makes crude more expensive in pesos, and speculative funds that ride momentum like surfers on a storm.

Why is the peso bleeding? For the same and opposite reasons. The US Federal Reserve kept rates higher for longer, pulling capital back to the US. Our import bill exploded because we pay oil in dollars. Our trade deficit widened and foreign investments hesitated on political noise.

We have been here before, separately and simultaneously. In 1973, oil rose 300% from $3 to $12. The Marcos administration then, under Martial Law, had to implement strict energy conservation measures - carless days, taxicab stands in Plaza Miranda, even a return to firewood when LPG doubled. We survived by rationing and by seeking alternative power.

In 1997, the peso was the casualty. The peso dropped from P26 per dollar at the start of the crisis to P46.50 in early 1998 to P53 in July 2001. BSP raised overnight rates from 15% to 32% to defend it, then let it float. We cushioned it with IMF programs, bank closures, and painful fiscal discipline.

However, when the twin maladies hit together (in 2008 and again in 2022), the effect was a worse mix of high prices, slow growth and hungry families.

What did we do then? We improvised a cushion. In 1984 we had created the Oil Price Stabilization Fund to cushion domestic prices from wide fluctuations. It went bankrupt though by 1995. In 2008, the government borrowed money from abroad to reduce the impact of high food and oil prices on the poor. We rolled out Pantawid Pasada (part of “Katas ng VAT” then), targeted cash transfers, and staggered price hikes.

What must we do now?  In the short term, government must be surgical, not wasteful. No blanket fuel subsidies that benefit the rich with SUVs. Expand targeted fuel vouchers for PUV drivers, fishermen and farmers. Release strategic rice and food stocks to break the second-round inflation. BSP must not burn reserves defending an indefensible level, but smooth volatility. And please, no price controls that create shortages.

For the people, we must do what Filipinos do best: conserve without being told. Carpool, maintain engines, shift to off-peak travel. Every liter saved is a dollar not imported.

For good, we must solve it. We have been an oil hostage for 50 years because we refused to diversify. Fast-track indigenous gas, geothermal, hydro and solar, not as press releases but as baseload. Revive serious public transport so workers won’t need their own vehicles to get to work. Build refineries or, at least, strategic reserves for 60 to 90 days.

For the peso, earn dollars, not borrow them. That means exports, not just remittances. Manufacturing, not just malls.

More importantly, to our country’s leaders, BSP, DOE, and the big business chambers who can change the course, stop managing the crisis, start ending it. The Filipino has weathered every oil shock and every peso crash because he had no choice. Give him a choice this time. Give him energy security and a strong currency built on production, not debt.

The storm is here again. Will we just put up tarpaulins over the price boards, or finally build a roof that holds?