We have always been in energy insecurity. We were working on energy security in the aftermath of the energy crisis of the 70s and 80s, but we were only 50% successful. Then with EDSA, we forgot that this was still an urgent problem.
When I joined PNOC in the late 1970s, we were reeling from the lasting effects of the Arab oil embargo and rapidly rising 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 has quadrupled. On top of that, they also limited what western oil companies could get.
We were then totally dependent on Caltex, Esso and Shell for all our oil needs. When their oil producers’ allowances were cut, their allocations to us were also cut under what they called “the equal misery formula”.
Then the Arab oil producers focused on us because the Marcos administration was supposed to mistreat Muslims in Mindanao.
When the first oil crisis hit us, we were 96% dependent on oil for our energy needs. The rest comes from some hydroelectric dams. Our mission was to diversify the geographical sources of our oil needs as well as to develop all domestic energy sources.
There was no inventory of energy resources available in the country. The first years were spent building this list, using domestic oil, geothermal, coal, hydroelectricity and unconventional energy sources like solar, wind and biogas. Every little account.
The emergency program has begun to bear fruit. A few small but commercially viable reserves have been discovered off Palawan… Nido, Cadlao and Matinloc. These fields produced oil but were too small for our needs.
Union Oil of California produced geothermal power at Tiwi and Makiling-Banahaw. PNOC started with a 3 MW pilot plant in Tongonan, Leyte and quickly became a major producer. Eventually we also produced in Mt Apo and Negros Oriental. In the end, we were the second largest geothermal producer in the world.
We secured the oil supply through diplomacy. To ensure that our oil shipments arrive on time and are not diverted, we have developed our own fleet of tankers, including two VLCCs or Very Large Crude Carriers.
But our foreign exchange reserves were fragile. So we came up with a plan to ration oil, in case we couldn’t afford to buy everything we needed.
We were ready to leave, with ration coupons already printed. Instead, we decided to start with an energy saving program or what we called enercon.
It had two components: an information campaign aimed at convincing our people not to waste energy and a series of directives prohibiting, among other things, the importation of luxury vehicles reputed to be energy guzzlers. The DTI has also imposed energy efficiency standards with which appliance manufacturers must comply.
We were doing a lot of R&D on unconventional energies. We have worked with piggeries to test biogas. We earned the ire of motorists in Bacolod where we first tested alcogas on the road. Our mixture did their engines a disservice.
Truckers laughed at us when we forced them to use coco diesel. They said they had to bring two toothbrushes when they went on a trip, one for their teeth and the other to brush the coir particles that gum up their engines. But at least their exhaust smells like the latik we put on the suman.
Energy security in our context now means not having to use oil as a fuel. Oil should increasingly be considered for its higher value uses such as petrochemicals.
The good news is that our electricity sector, the biggest consumer of energy, has been weaned off bunker fuel and diesel. The only big problem was the transport sector which remained completely dependent on diesel and gasoline.
This is where we are today. We are now worried about energy security because our jeepneys and our buses and our cars still use petroleum fuels whose prices are exploding.
This vulnerability should have been addressed by electrically powered mass transit train systems.
Indeed, DOTr could have used electric vehicles today in its jeepney retrofit program. I understand that private transport operators who have switched to electric vehicles are happy not to be affected by high diesel prices.
There are proposals to buy cheap Russian oil. But it is a solution that poses even more serious problems.
There’s a reason there are few takers for Iranian and Russian oil these days, even with the deep discounts. We risk being sanctioned and our banks expelled from SWIFT. We will eventually limit ourselves to Russia and China for our trading partners. OFWs may have problems sending funds to their families here.
There are other proposals to strengthen energy security. The constitution of a strategic oil reserve is one of them. But neither the government nor the oil companies can be inclined to finance this. It is also only a buffer in the event of a severe oil supply disruption rather than a price stabilization tool.
Dumping oil deregulation will not lower prices at the pump. 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 global market share such as the Philippines.
“Small importers are simply too small to influence the impacts of these major events on the market price. This is why the regulation of domestic prices is difficult. The deregulation policy aims to avoid the cost of defending misaligned prices.
Energy security means we need to invest more in renewable energy like solar power and the batteries associated with it. Geothermal is good, but it seems that we have developed everything that Mother Nature gave us. Convince the native tribes to let us develop our vast hydroelectric resources.
First Gas is talking about using hydrogen for its power plants. A week ago, researchers from a Norwegian university had for the first time operated a gas turbine using pure hydrogen as fuel.
We need a comprehensive plan that can deliver quickly. Our economy should not be constrained by this energy dependence on imported oil. It’s so yesterday.
Boo Chanco’s email address is [email protected]. Follow him on Twitter @boochanco