Addressing the Issue on Energy

Column Title: Let's Talk About It
By Minerva Zamora-Arceo
Punto, August 28, 2008

Although the prices of petroleum products slightly dropped this month, economists look at the trend in an upward slope. The prices of petroleum products are indicators of larger issues on energy. The Philippine government is currently conducting consultation from the regions on its energy situation as part of the 20-year comprehensive plan being prepared by the Department of Energy and NEDA.


Last August 21, the consultation for Central Luzon was held at the Holiday Inn Clark inside the Clark Freeport Zone. At least 200 participants from various sectors all over the region joined the consultation process. The Advocacy for the Development of Central Luzon (ADCL) was invited being an active partner of NEDA Reg. 3 in several advocacies for economic and infrastructure development.

The demand on energy worldwide continuously grows while the resources are gradually depleting. This is the most problematic fact that is being addressed by several nations. Energy is required for economic growth. It is a very crucial instrument for poverty reduction, social equity and economic development.

As it stands today, Director Zenaida Y. Monsada of the Oil Industry Management Bureau said that oil pricing in the country is affected by the trends in supply and demand in the world market. Out of the total world oil demand of 86.8 million barrels per day, United States uses 20.43 million barrels while China requires 8 million barrels. Our country uses a measly .28 million barrels. The current available supply is pegged at 87.28 million barrels per day from OPEC and non-OPEC countries supplying oil.

The same as many countries dependent on imported crude and other oil products, the Philippines is at the mercy of the global trends. The higher the demand in the global market, the faster the prices increase because of limited supply.

The depleting oil reserves are an important factor for the limited supply. However, another factor that contributes to the limited supply of oil is the decreased capacity of some countries to produce oil products due to shut down of oil refineries. In the Philippines, the 50-year old Caltex oil refinery stopped operations in the 90s, thus affecting the prices of oil products in the country. Before, we have the capacity to refine our own but today we completely import petroleum products.

Oil refineries mostly shut down due to environmental policies like the Clean Air Act and others. Other factors include geopolitical tensions in oil producing countries like Iraq, Nigeria, Venezuela, Iran and others. There is also the issue of climate change and the weakening dollar vs. the Euro.
Given these reasons for the limited oil supply, the national government is now exploring alternative fuels like biodiesel and bioethanol. Since May 2007, all oil distributors were mandated to implement the 1 percent biodiesel blend under the Biofuels Act of 2006. By 2009, the same will be mandated to mix 5 percent ethanol.

The renewable energy resources are also being explored to address the growing demand on energy in the country. This includes hydropower, geothermal, wind, biomass, solar and ocean energy. Sen. Ed Angara is one of the staunch advocates of renewable energy. He is now bullish on the establishment of wind power mills in Aurora to take advantage of the province’s location at the foot of the Pacific Ocean.

Based on the study of DOE, our country has huge potentials in exploring the development of geothermal, gas and coal resources. There are 13 coal zones in the country and four of these are in Luzon. According to the DOE, our country’s potential coal reserve is pegged at 746 million metric tons.

Aside from the development of renewable energy resources and geothermal, gas and coal resources, the national government is also campaigning for the enhancement of energy efficiency and conservation to address the growing problem on energy.

Part of this campaign is the implementation of the National Efficiency and Conservation Program (NEECP), Palit-Ilaw program and the expansion of coverage of the energy labeling in the Philippines. The government is also pushing for the promulgation of the Minimum Energy Performance Standards to phase out the least efficient lamps in the market by 2009 and the Energy Conservation Bill.

There is also a move to look at Nuclear Power as a long-term energy option. But the DOE is preparing first to strengthen local expertise in nuclear energy before the Bataan power plant be even considered to operate.

And while several possible solutions are being explored to ensure stable and quality supply of energy in the country, the immediate concern that must be addressed by the Arroyo government is to make oil prices reasonable and affordable at the moment. Bureaucratic interventions and sound policies on oil pricing can be imposed if only to stop the oil cartel from dictating high prices. The Oil Deregulation Law must also be repealed and the government must revive its power to regulate oil prices. (30)