The Diesel Floor Price Will Outlast the Ceasefire, will not go back to ₱61

What It Means

• The diesel floor price in the post-conflict era has been publicly anchored at ₱100 or above by both a former and the current DOE Secretary, signaling a permanent repricing of the Philippine cost structure
• A two-week US-Iran ceasefire was announced on April 8, but vessel traffic through the Strait of Hormuz remains negligible and infrastructure damage in the Middle East will take years to repair
• The ₱6 per liter excise suspension, if it takes effect, covers roughly 6% of the total cost increase since February, leaving transport operators and agricultural producers to absorb the rest
• Businesses whose cost models depended on diesel below ₱70 per liter now face a structural viability question, not a temporary squeeze

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On April 7, former DOE Secretary Jericho Petilla went on national television and told Filipinos to stop hoping. Diesel will not return to ₱61 per liter. His forecast: ₱100 or slightly above once the conflict settles. Gasoline, just under ₱100. The reason is physical. Refineries and extraction facilities across the Middle East have been damaged or destroyed. Rebuilding takes years, not months.

Hours later, sitting DOE Secretary Sharon Garin said the same thing in different words. Prices will not fall at the speed they rose. The damage goes beyond the war itself. On April 8, she told the House Ways and Means Committee that even a 40% probability scenario puts diesel at ₱90 to ₱105 per liter. She did not rule out ₱200.

That is two DOE Secretaries, one former and one current, anchoring the same number in the same week. This is not commentary. It is a coordinated signal to the economy: reprice your cost assumptions now.

The Ceasefire Changed Headlines, Not Supply

A two-week US-Iran ceasefire was announced on the evening of April 8. Oil prices dropped 13% to 16% overnight. Markets responded to the possibility of the Strait of Hormuz reopening.

But the strait has not reopened in any meaningful way. As of April 9, only a handful of bulk carriers have transited, none of them oil tankers. Over 400 tankers remain anchored in the Persian Gulf. Iran’s Revolutionary Guard said shipping was halted again after Israel struck Lebanon, which Tehran called a ceasefire violation. The maritime industry is waiting, not moving.

Even if the ceasefire holds and tankers begin flowing, the supply problem is not the strait alone. It is what sits behind it. The DOE’s own assessment is that 20% of global oil supply has been disrupted and the physical infrastructure needed to restore it does not exist yet. Garin said reconstruction will take “months or even years.” A two-week ceasefire does not rebuild a refinery.

So the diesel floor price is not a function of whether the war ends. It is a function of how long it takes to rebuild production capacity that no longer exists. The ₱100 number reflects that physical reality. But it also does something else.

₱100 Anchors Expectations in the Right Direction for the Wrong People

When the government signals a diesel floor price of ₱100, it resets what relief looks like. If diesel drops from ₱170 to ₱120 next month, the public will experience that as a ₱50 rollback. That feels like progress. It is still double the pre-crisis price.

Oil companies holding inventory purchased at crisis-level acquisition costs benefit directly from this anchoring. If crude benchmarks ease and the diesel floor price stays above ₱100, the margin between replacement cost and retail price widens. Garin herself acknowledged the asymmetry: prices rise fast, but they fall “way, way slower.” That slowdown is not a market failure. It is a margin opportunity for companies that control the supply chain.

The anchoring also reduces political pressure for structural intervention. If ₱100 diesel is accepted as the new baseline, then ₱6 in excise relief looks like it is doing something. Against the actual cost increase of ₱100 or more per liter since February, that ₱6 covers roughly 6%. But against a ₱100 “new normal” that feels inevitable, the political cost of demanding more drops. The diesel floor price becomes the ceiling of public expectation.

The Structural Gap Is Where Businesses Fail

The distance between the diesel floor price and the excise relief ceiling is where cost absorption happens. That distance is currently around ₱94 per liter of pure cost increase with no government offset.

Transport cooperatives running provincial jeepney routes cannot pass through a permanent 60% to 70% fuel cost increase without fare adjustments that passengers will resist. The fuel subsidy mechanism already comes paired with fare hikes, and operators know it. Small trucking operators locked into fixed-rate delivery contracts signed before February face margin compression they cannot survive. Agricultural producers in Mindanao and the Visayas who depend on diesel-powered logistics to move goods to market are watching their per-unit transport costs permanently reset.

These are not businesses that were struggling before the crisis. They were functional. The diesel floor price above ₱100 turns them into structurally nonviable operations unless every contract gets renegotiated, every price gets raised, and every cost line gets rebuilt. Most cannot do all three at once.

Demand has already responded. DOE Undersecretary Alessandro Sales confirmed on April 7 that fuel demand dropped 20% to 40%, with diesel demand destruction particularly pronounced. That is not conservation. That is buyers exiting the market because the diesel floor price has exceeded their ability to operate.

The Number Is Real. The Framing Is Not Neutral.

The ₱100 diesel floor price may be an accurate projection. The infrastructure damage is real. The supply constraint is real. The timeline for recovery is measured in years.

But presenting that number as an inevitable fact of geology and war, without acknowledging that it also serves specific interests, is not neutral analysis. It is positioning. The same number that tells the public to stop expecting relief also tells oil companies their margins are protected and tells the government that ₱6 in excise cuts is a reasonable response to a ₱100 cost shock.

The businesses absorbing the difference did not set that number. They did not anchor it. And they are not the ones who benefit from it sticking.

More developments that reshape the operating environment in National Signal section of Hemos PH.