The Philippines is no longer dealing with a temporary oil shock. What is unfolding is a longer shift—one that will shape how transport, prices, and economic stability behave in the years ahead. Fuel prices will still rise and fall, but they are unlikely to return to the levels that once made a diesel-dependent system workable.
When oil prices move, the effects do not stop at the pump. Transport fares adjust. Food prices follow. Household budgets tighten almost immediately. Government steps in, as it has done many times, through fuel subsidies. Under the 2025 General Appropriations Act alone, ₱2.5 billion was allocated for the Fuel Subsidy Program, with an additional ₱617 million carried over from 2024. It provides relief, but it does not change the underlying exposure. (Presidential Communications Office, June 2025)
The country imports more than 90 percent of its crude oil and holds only around 30 to 45 days of commercial fuel inventory—well below the 90-day buffer recommended by the International Energy Agency. Transport uses up the largest share of that fuel and moves tens of millions of passengers each day. (Lowy Institute, 2026) When diesel prices rise sharply, the consequences are immediate—fares go up, delivery costs increase, and basic goods become more expensive.
That level of exposure is built into the system. It does not correct itself.
In 2017, the Department of Transportation issued Department Order No. 2017-011, which laid out the Public Utility Vehicle Modernization Program (PUVMP). The direction was clear even then: phase out older vehicles, bring in modern units—electric or Euro 4—and reorganize routes into a more disciplined system built around one route, one franchise.
That direction has already been tested legally. In 2024, the Supreme Court of the Philippines upheld the program, affirming the government’s authority to carry out transport modernization in the interest of public welfare.
The policy is there. What has not followed is full execution.
Modernization was never just about replacing old units. The bigger shift was in how the network itself would operate—larger vehicles on main corridors, smaller ones feeding from communities, and fewer vehicles competing along the same roads.
EDSA offers a working example.
Under the Land Transportation Franchising and Regulatory Board, 96 overlapping bus routes were reduced to 31 through Memorandum Circular No. 2020-019. The EDSA Carousel that followed now serves around 300,000 passengers daily, with more than 63 million riders recorded in 2024. Travel time, which could stretch to three hours during peak congestion, was cut roughly in half.
A study published in Future Transportation (Multidisciplinary Digital Publishing Institute, 2025) placed the system’s Benefit-Cost Ratio at 15.38 and its Net Present Value at about ₱778 billion. Trip time went down by 64 percent. Throughput increased by 75 percent.
BCR of 15.38. NPV of ₱778 billion. Trip time down 64 percent. Throughput up 75 percent. These came from actual operations, not projections.
What has not kept pace is the rest of the system. Feeder routes remain incomplete. Many local governments have yet to fully implement their Local Public Transport Route Plans. The transition away from diesel vehicles still has no firm and enforced timeline. The structure exists, but only part of it is in place.
For operators, the cost question remains the hardest part. A traditional jeepney costs between ₱200,000 and ₱400,000. A modern unit can go up to ₱2.8 million—about seven times higher. (Philippine Institute for Development Studies, 2024) That gap cannot be ignored.
But the purchase price is only one part of the cost. Diesel has to be bought every day, at prices that shift with global conditions. That exposure does not ease. Electric vehicles change that structure. They cost more upfront, but their operating costs are lower and more stable over time.
Financing support is already in place through Land Bank of the Philippines and the Development Bank of the Philippines, with interest rates around six percent. The adjustment needed is straightforward: longer repayment periods, lower equity requirements, and models that allow operators to pool resources instead of carrying the burden alone.
The government is already spending billions to keep the current system afloat through subsidies. Redirecting even part of that spending toward modernization builds something that lasts.
The program slowed during the election period. That pause has passed. Oil prices remain volatile. The legal framework has been upheld. A working model is already in place on one of the country’s busiest corridors.
The design is not the problem. Electric buses on main roads. Smaller vehicles on internal routes. A clear transition away from diesel.
What matters now is whether it is carried through.
The country can continue absorbing the cost of fuel shocks and respond each time with temporary relief. Or it can complete the transition and reduce that exposure altogether.
Because every year spent delaying reform is another year spent paying for a system that cannot sustain itself.
Disclaimer: The views and opinions expressed in this article are those of the author and are intended to encourage public discussion on governance and national issues. They do not represent any official position of the institutions the author may be affiliated with.
About the Author:
Paul Y. Chua, PhD, holds doctoral degrees in Fiscal Management and Peace and Security, and a master’s degree in National Security Administration. He has completed executive programs in several countries, specializing in transport, migration, urban planning, and public policy, with emphasis on governance, innovation, and integrity.
Originally published by The Daily Chronicle.