DEMAND AND SUPPLY – Boo Chanco – The Philippine Star
June 17, 2022 | 12:00am
We have always been energy insecure. We were working towards energy security in the aftermath of the energy crisis of the 70s and 80s, but only managed up to 50 percent. Then with EDSA, we forgot it was ever an urgent problem.
When I joined PNOC in the late 70s, we were reeling from the lasting effects of the Arab oil embargo and the quick rise in oil prices. The Arabs wanted to punish the West for supporting Israel during the Yom Kippur War.
With the embargo, the price of a barrel of oil quadrupled. On top of that, they also limited what Western oil companies could get.
We were at that time totally dependent on Caltex, Esso and Shell for all our oil needs. When their allocations from the oil producers were cut, their allocations to us were also cut following what they called “the equal misery formula.”
Then the Arab oil producers zeroed in on us because the Marcos administration was supposedly mistreating the Muslims in Mindanao.
When the first oil crisis hit us, we were 96 percent dependent on oil for our energy requirements. The rest comes from some hydroelectric dams. Our mission was to diversify the geographical sources of our oil needs as well as develop all domestic energy sources.
There was no inventory of domestically available energy resources. The first few years were spent developing this list, from domestic oil, geothermal, coal, hydro and unconventional energy sources like solar, wind and biogas. Every little one counts.
The crash program started to bear fruit. Some modest but commercially viable reserves were discovered off Palawan… Nido, Cadlao and Matinloc. These fields produced oil but were too small for our needs.
Union Oil of California produced geothermal energy in Tiwi and Makiling-Banahaw. PNOC started with a 3 MW pilot plant in Tongonan, Leyte and soon became a major producer. Eventually, we also produced in Mt Apo and in Negros Oriental. In the end, we were the second largest geothermal producer in the world.
We secured oil supplies through diplomacy. To ensure our oil shipments arrive on time and not diverted, we developed our own oil tanker fleet including two VLCCs or Very Large Crude Carriers.
But our foreign exchange reserves were shaky. So we developed an oil rationing plan, on the off chance we may not be able to afford to buy everything we need.
We were ready to go, complete with ration coupons already printed. Instead, we decided to start with an energy conservation program or what we called enercon.
It was two-pronged: an information campaign that sought to convince our people not to waste energy and a series of directives that among others banned the importation of luxury vehicles deemed to be gas-guzzling. DTI also imposed energy efficiency standards which manufacturers of appliances must comply with.
We were doing a lot of r and d on unconventional energy. We worked with piggeries to test biogas. We earned the ire of motorists in Bacolod where we first road tested alcogas. Our blend didn’t do their engines any favors.
Truckers ridiculed us when we forced them to use coco diesel. They said they have to bring two toothbrushes when they go on trips, one for their teeth and the other to brush particulates from the coco diesel gumming their engines. But at least, their exhaust smells like the latik we put on suman.
Energy security in our context now means not having to use oil for fuel. Petroleum should be increasingly seen for its higher value uses like petrochemical products.
The good news is, our power sector, the biggest energy user, was weaned from bunker fuel oil and diesel. The one big problem was the transport sector which remained totally dependent on diesel and gasoline.
That’s where we are today. We are worried about energy security now because our jeepneys and buses as well as cars still use petroleum fuel products whose prices are going through the roof.
This vulnerability should have been addressed by mass transit train systems powered by electricity.
Indeed, DOTr today could have used EVs in their jeepney modernization program. I understand that private transport operators who shifted to EVs are happy they are not affected by high diesel prices.
There are proposals to buy cheap Russian oil. But that’s a solution that brings in even more serious problems.
There is a reason why there are few takers for Iranian and Russian oil these days even with the hefty discounts. We risk getting sanctioned and our banks thrown out of SWIFT. We will end up being limited to Russia and China for our trading partners. OFWs may have problems remitting to their families here.
There are other proposals to enhance energy security. Setting up a strategic oil reserve is one. But neither the government nor the oil companies may be inclined to fund this. It is also only a buffer during instances of severe oil supply disruption rather than a price stabilization tool.
Dumping oil deregulation won’t bring down pump prices. We still have to pay international market prices for imported oil.
A government study concludes that price regulation is not effective for net oil importing countries with a small share in the global market like the Philippines.
“Small importers are simply too small to influence the impacts of these major events on the market price. That is why domestic price regulation is difficult. The deregulation policy is meant to avoid the cost of defending misaligned prices.”
Energy security means we must invest more on renewable energy like solar and the batteries associated with it. Geothermal energy is fine but it seems we have developed all that Mother Nature gave us. Convince the indigenous tribes to let us develop our ample hydro resources.
First Gas is talking about using hydrogen for their power plants. A week ago, researchers in a university in Norway had for the first time powered a gas turbine using pure hydrogen as fuel.
We need a comprehensive plan that can deliver quickly. Our economy must not be constrained by this energy dependence on imported oil. That’s so yesterday.
Source: https://www.philstar.com/business/2022/06/17/2188858/energy-security