Puerto Rico Faces Bigger Economic Threat From 2026 Oil Shock, Centro CRECE Warns

Puerto Rico could face a tougher economic blow from the 2026 oil shock than it did from the 2022 spike that followed Russia’s invasion of Ukraine, according to a new report from Centro CRECE.
The central finding of the research conducted by Gabriel Capella, a research associate at the Centro CRECE, is that Puerto Rico’s economy is far more vulnerable now than it was four years ago. In 2022, the blow was cushioned by the post-pandemic economic rebound, federal stimulus funds, near-zero interest rates and a strong labor market. Those tailwinds are no longer present. The 2026 shock is arriving in an economy marked by an Economic Activity Index that has been stagnant since 2023, employment growth that turned negative in 2025, nearly $1 billion in additional tariff costs, and an electric grid that still depends on imported fossil fuels for 93% of its generation capacity.
“Although the 2026 oil shock is larger than the 2022 shock in terms of the percentage increase in oil prices, its real danger lies in the current circumstances. Four years ago, factors helped absorb the blow, and the Economic Activity Index remained stable. Today, none of those favorable factors is present, and when the shock arrived, the economy was already stagnant,” Capella said.
To confront the threat, the report recommends both immediate relief measures and longer-term structural reforms. Those recommendations include suspending the local petroleum excise tax known as “la crudita” and the tax on prepared foods, accelerating the diversification of electricity generation, streamlining the permitting process and tying reshoring incentives to integration with local supply chains. The report also outlines practical strategies companies could implement to protect their margins as input costs rise and consumer demand weakens.
The 2022 and 2026 Oil Shocks: Implications and Policy Options for Puerto Rico is available through the Centro CRECE’s Road to Prosperity policy brief series.
The report notes that the price of West Texas Intermediate crude oil rose 35% in 2022, from $92 to $124 per barrel. In 2026, the increase was steeper, rising 74% from $66 to $115 per barrel.
As of June 20, 2026, following the announcement of a peace agreement between the United States and Iran, the price of WTI crude had fallen from $96 to $76 per barrel, less than $10 above the pre-shock price. Still, the study warns that Puerto Rico’s exposure remains significant because energy and transportation costs quickly ripple through the broader economy.
The 2022 shock increased retail gasoline prices in Puerto Rico by 43%, from an average of 79 cents per liter in 2021 to $1.13 between February and August 2022. The report estimates the economic cost at $628 million and says gross national product growth may have been reduced by 0.6 to 0.8 percentage points in fiscal year 2022. Transportation prices rose 15.6% year over year in June 2022, while the average price of electricity increased 59% from July 2021 to July 2022 and 35% from January 2022 to July 2022. According to the report, electricity cost pressures took 18 months to return to pre-shock levels, while gasoline and electricity prices took 10 months to normalize. Puerto Rico’s Economic Activity Index grew just 0.6% in 2022, well below the 3.5% increase recorded in 2021.
The report identifies several factors that could aggravate the impact of the 2026 shock. Puerto Rico’s Economic Activity Index has stalled; the labor market lost momentum and turned negative in 2025 even as total nonfarm employment reached its highest level in 17 years, and the economy is carrying the added burden of U.S. tariffs, whose local impact may have reached $1 billion in 2025, according to the Puerto Rico Statistics Institute. The island’s power system also remains heavily exposed to global fuel prices because 93% of generation capacity still depends on imported fossil fuels.
The study estimates that the economic cost could have reached $1 billion if the $30-per-barrel increase had been sustained for a full year. In that scenario, the cumulative cost over two years would have negated the benefits of reshoring.
The report says policymakers could provide immediate relief by suspending the excise taxes on crude oil, partially refined petroleum products, and finished petroleum products for 90 days. This measure could cost up to $60 million. It also proposes suspending fuel excise taxes specifically applied to gasoline, gas oil, and diesel oil for 45 days, at an estimated cost of about $25 million. Another recommendation is to suspend the 7% tax on prepared foods for 90 days, with an estimated fiscal cost of about $63 million.