Governments across Asia and the Pacific have rolled out subsidies, tax cuts, and other measures to cushion the impact of surging fuel prices, with the Philippines among economies implementing the most policy responses, according to an Asian Development Bank (ADB)  analysis titled “The Impact of the Middle East Conflict on Asia and the Pacific.” 

The ADB said fuel prices have risen sharply across the region following supply disruptions linked to the Middle East conflict, prompting governments to intervene to protect consumers and key sectors.

“The shock is already being felt by consumers,” the ADB said, noting that retail diesel and gasoline prices have increased across most of Asia and the Pacific.

Data from ADB showed that diesel prices increased by more than 100% in several Southeast Asian economies, while gasoline prices also rose, albeit at a slower pace. The sharper increase in diesel prices reflects its heavy use in transport, agriculture, and industry, where alternatives are limited.

Across the region, at least 30 of 44 economies implemented measures such as fuel subsidies and excise tax cuts, underscoring the widespread policy response to the oil shock.

The Philippines was among countries that deployed multiple interventions, including subsidies, tax adjustments, and other mechanisms aimed at easing the burden of higher fuel costs on consumers.

The ADB noted that some governments also adopted price controls, strategic reserve adjustments, and targeted assistance programs as part of a broader effort to stabilize domestic markets.

“The most frequently used policy responses in the region to date have been fuel subsidies, and/or excise tax cuts,” the ADB said, highlighting how governments have responded to rising energy costs.

However, the multilateral lender cautioned that while subsidies and tax cuts can provide short-term relief, they come with trade-offs.

Such measures can be costly for governments and may distort price signals that encourage more efficient energy use, the ADB said, noting that targeted support mechanisms may offer a more sustainable approach.

Beyond immediate fuel costs, the oil shock is also expected to contribute to inflationary pressures, particularly as higher diesel prices feed into transport and logistics costs, potentially affecting food prices and other essential goods.

The ADB added that continued disruptions to global oil and gas supply chains, along with higher shipping and insurance costs, could keep fuel prices elevated in the near term.

Are current subsidies and tax measures enough to shield Filipino consumers from prolonged fuel price increases?

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