The Department of Energy (DOE) threatened oil companies with legal action if they fail to implement government-mandated price rollbacks that significantly exceed industry calculations, citing powers granted under a state of national energy emergency.

Energy Secretary Sharon Garin issued the warning during an emergency meeting Sunday, April 12, with industry participants, including Energy Undersecretary Alessandro Sales and Oil Industry Management Bureau Director Rino Abad.

The department is demanding that retailers align their price adjustments with government estimates that have already been briefed to President Ferdinand Marcos Jr., according to a person familiar with the discussions.

Failure to comply with the directive could result in show-cause orders and legal sanctions under Executive Order 110, which declared a national energy emergency, the source said. The government expects price reductions of ₱20.89 per liter for diesel, ₱4.43 per liter for gasoline, and ₱8.50 per liter for kerosene to take effect on Tuesday.

“The oil companies were told to follow the rollback calculation of the DOE because, according to the Secretary, the expected price cuts had already been reported to President Marcos,” a highly placed source told the Manila Bulletin.

The industry insider added, “If there are oil firms that will not follow, the DOE has threatened to issue show-cause orders, and these players will face legal sanctions within the purview of the National Energy Emergency Declaration or Executive Order 110.”

Over the weekend, Garin publicly released the scale of price rollbacks the government expects to be enforced by Tuesday (April 14) across petroleum commodities.

However, based on calculations by oil companies, the outcome of last week’s trading in the regional market—anchored on the Mean of Platts Singapore (MOPS)—would only warrant price cuts of approximately ₱12.813 per liter for diesel, ₱3.891 per liter for gasoline, and ₱5.695 per liter for kerosene, plus an allowance for market premium.

These MOPS-calculated adjustments do not yet include other pricing determinants affecting pump costs, such as the Philippine peso-US dollar exchange rate, market premiums, and insurance costs.

Another industry source indicated that the DOE presented its own basis for the rollback calculations to the firms. This included the MOPS trading outcome integrated with cost components such as the free-on-board (FOB) price per barrel, foreign exchange rates, freight, market premium, and insurance charges.

According to the DOE monitoring report, the FOB per barrel for diesel eased to $228.91 from $256.87, while the market premium was trimmed to $44.54 from $64 and the forex softened to P59.97 from P60.58. For gasoline, the FOB per barrel slipped to $131.74 from $139.67 and the market premium declined to $4.85. For kerosene, the FOB per barrel fell to $216.44 and the market premium softened to $30.27.

Notably, the DOE estimates have not yet factored in tax components or the oil companies' margins, which cover distribution costs and operational management.

While consumers may find temporary relief in this week’s reductions, industry players cautioned that it could be short-lived. Ceasefire talks between the U.S. and Iran ended in a deadlock over the weekend; consequently, geopolitical risks remain a dilemma for global economies.

Beyond price volatility, markets remain anxious over potential supply disruptions if no breakthrough is reached regarding the Middle East conflict. In the local context, one source asserted that if the government insists on controlling prices, oil companies may have no choice but to stop purchasing fuel, which could trigger a broader domestic supply crunch.