Last Tuesday, an energy undersecretary said he does not see gas and diesel prices hitting P100/liter this year. As reported by our philstar.com reporter Angelica Yang, DOE Usec Gerardo Erguiza told a Laging Handa briefing that “there are no drastic factors… and existing circumstances” for prices to reach that level.”
One day after, another energy official, Rino Abad, director of its industry management bureau told GMA’s Unang Balita that consumers will have to brace for more rounds of fuel price increases in the coming weeks.
“Tuloy tuloy na pagtaas… wala po tayong nakikitang event — sana may dumating — na siyang mag-offshoot ng push na tuloy tuloy na pag increase ng ating price.”
Of course the bureau director was right and the undersecretary was dreaming. The Russian war in Ukraine is the principal cause of rising oil prices worldwide and it isn’t ending soon. It doesn’t help that it is also summer in the northern hemisphere and that’s the prime driving season.
Goldman Sachs is forecasting Brent crude oil prices will average $140/barrel between July and September, CNN reports. Brent is currently trading at $121.97/barrel.
“A large spike in prices remains quite possible this summer,” CNN quotes Goldman Sachs strategists writing in a report to clients. The forecast suggests the worst is not nearly over for consumers already suffering currently high gas prices.
We have an energy crisis whether our government recognizes it or not. This is why the incoming president must resist the temptation of appointing an energy secretary who doesn’t have a good industry background.
Junior’s father had to deal with an energy crisis too during his time and he appointed Ronnie Velasco who expertly managed the response. Ronnie, an engineer and accomplished manager, should be the bar that Junior’s appointee must meet.
Duterte’s fault was politicizing the energy department by appointing a politician with no background in energy. There are two major industries under energy: oil and power and both are critical. It would be a grave mistake to appoint a clueless lawyer as energy secretary just to pay a perceived political debt.
Even now, we can see the problem at the energy department. We have two senior officials giving dramatically different assessments of oil prices.
Of course our pump prices will reach P100/liter. It is near that level in NCR and already at the P100/liter level in the provinces.
What we are not getting from our energy officials is what they plan to do about it. Because we import all our petroleum requirements, we have no choice but to buy at international market prices.
But the pump prices of gasoline and diesel have other components like taxes. The use of fuel alcohol also adds to the gasoline price. Until fairly recently, the cost of imported fuel alcohol is more than the cost of gasoline. But gasoline is more expensive now.
For background, the addition of ethanol to gasoline was mandated by a law supposedly to help our sugar industry. But our sugar industry is unable to supply the requirements of our oil industry. So we have to import. We are not saving any dollars. Our motorists are subsidizing foreign sugar planters.
If pump prices cross the P100/liter mark specially for diesel, our transport sector will be in trouble. LTFRB just announced a mere P1 provisional increase in fares. So, how will the operators and drivers manage? Better to keep their units in the garage.
DOTr made a big mistake in their jeepney modernization program. They should have opted for EVs or electricity powered jeepneys. That would have insulated public transportation somewhat from the P100/liter diesel.
Endika Aboitiz was telling me a few weeks ago that Aboitiz Power launched an experiment in Davao using EVs. They imported EV powered 30-passenger mini buses from China and offered free rides to the public provided they downloaded an app. The free rides are financed by advertising.
Endika was telling me that his experiment was wildly successful and has started to expand it nationwide. I am just waiting for a full briefing he promised me. But from what he told me, he seems to have a solution that DOTr should have thought of first. We should start thinking EV.
Ronnie Velasco’s legacy was reducing our dependence on imported oil from over 98 percent when he took over, to just about 50 percent when he left office. Our dependency level on imported energy has gone up (imported coal instead of oil) with the increase in demand as our population grew.
Geothermal was experimental at just three MW when Ronnie started his energy source diversification program. By the time he left, we were the second highest geothermal power producer in the world.
But it is the transport sector that’s almost totally dependent on diesel and gasoline. We don’t have a good mass rail system powered by electricity. Indeed, our rail sector deteriorated through the years.
We didn’t have the technologies then that are now being used in Teslas and other EVs. But now we do. We have the means to reduce the dependence of our transport sector to gasoline and diesel.
Indeed, the same battery technology that Tesla cars use can be used even in our power sector. Lean Leviste had long been telling me about how he is using big Tesla batteries to make his solar panel installations in far flung barangays deliver power at night.
Ramon Ang also talked about using the same battery technology to store power generated by coal plants at night when demand is low so they can have stored power required by the system during daytime peak hours.
The other big problem the next energy secretary will face is adequate power supply to avoid brownouts. Our dependable installed capacity had been going down with a number of aging coal plants.
NGCP also needs to speed up the installation of properly sized submarine cables so we can use the excess power supply in Mindanao.
We want to hear viable plans and programs from our energy officials. They should know the intricacies of the energy sector (oil and power) on day one. Otherwise, we are in trouble.
Boo Chanco’s email address is bchanco@gmail.com. Follow him on Twitter @boochanco.