Demand destruction: How surging pump prices can destroy local fuel demand

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Demand destruction of fuel products, particularly diesel, comes as pump prices in the Philippines continue to breach historic highs

MANILA, Philippines – How has demand for fuel changed since the conflict in the Middle East began? 

As pump prices in the Philippines continue to rise to historic highs, consumers are apparently buying less petroleum products.

This is what Department of Energy (DOE) officials told reporters during a press conference on Tuesday, April 7.

According to DOE Undersecretary Alessandro Sales, fuel demand may have dropped by 20% to 40%. Demand for diesel, in particular, has dropped by at least 20%.

“And hirap i-pin down kasi wala tayong actual data on demand, ‘yung sales. But based doon sa mga inventory levels at least 20% demand destruction, particular sa diesel. Mas pronounced ang demand destruction sa diesel,” he explained.

(It’s hard to pin down because we don’t have actual data on demand, sales. But based on inventory levels, there’s at least 20% demand destruction, particularly in diesel. The demand destruction for diesel is more pronounced.)

Diesel being the hardest hit by this demand destruction is no surprise. Prices for diesel as of Monday, April 6, ranged between P110 to P150.30 per liter, at least twice the price before the war began.

Before the Middle East crisis, a vehicle with a 40-liter diesel tank would cost around P2,800. With diesel prices at a new historic high, it now costs around P4,800.

Of all the fuel products, Energy Secretary Sharon Garin said that the Philippines consumes diesel the most. This is the most common fuel used, for instance, by the country’s public transport sector as well as in deliveries of many commodities via trucks.

“Diesel is what we consume. So, we need to maintain continuity and reliable supply for our public transportation,” she said in an earlier press conference on March 30.

Higher diesel prices is making transport operators cut back on trips. Commuters could also be opting for fewer trips or seeking alternative transport modes.

It’s worth noting, though, that the DOE’s numbers are based on storage withdrawal rates. This is the speed at which oil companies are withdrawing fuel supply from their storage facilities. If demand has dropped around 20%, this means oil firms are taking out 20% less fuel from their storage facilities.

Sales explained that it’s hard to pin down the actual figures on the ground since the DOE does not have actual sales data from oil firms, which can paint a clear picture of actual demand.

Slower rollback

Garin also said the country’s fuel supply has remained relatively steady compared to the previous week, with fuel availability just dropping to 50.42 days from last week’s 50.9 days.

These figures are calculated using the country’s average daily demand for fuel between April and September 2025. 

Even if the war in the Middle East were to end soon, Garin said that rollbacks for pump prices will be slower than the rate of the price hikes.

“In fact, it will be way, way slower because ang damage ng giyera na ‘to. It goes beyond the war, iba na ang epekto niya (In fact, it will be way, way slower because of the damage this war has caused. It goes beyond the war, its effects are something else),” she said.

For now, the Philippine government is trying to procure enough fuel to ensure an adequate buffer stock. A shipment of 300,000 barrels of diesel is expected to arrive from Malaysia on Friday, April 10, with two more shipments later in the month. The daily demand for diesel is around 205,000 barrels.

Garin also said that the DOE is in talks with liquefied petroleum gas (LPG) firms to consolidate orders and maintain adequate supply. – Rappler.com