This story
was taken from Bulatlat, the Philippines's alternative weekly
newsmagazine (www.bulatlat.com, www.bulatlat.net, www.bulatlat.org).
Vol. VI, No. 13, May 7-13, 2006
Gov’t Urged to Nationalize
Oil to Solve Crisis
Experts urged the government to scrap the oil deregulation law and nationalize
the oil industry to solve the oil crisis in the country, instead of merely
paying “lip service” to the development and propagation of alternative energy
sources and resorting to “political solutions.” BY
AUBREY SC MAKILAN Experts urged the
government to scrap the oil deregulation law and nationalize the oil industry to
solve the oil crisis in the country, instead of merely paying “lip service” to
the development and propagation of alternatives energy sources and resorting to
“political solutions.” Nationalize oil industry Carmelito Tatlonghari, a
climate change expert and former Energy Program Manager of the United States
Agency for International Development (USAID), and Giovanni Tapang, PhD,
chairperson of the Samahan ng Nagtataguyod ng Agham at Teknolohiya Para sa
Sambayanan (Agham
or Advocates of Science and Technology for the People) both said that
nationalizing the oil industry will solve the oil crisis in the country. Tatlonghari believes that
prices could be lower if oil is traded between governments and not through
private companies. “Service contracts for supplying oil usually involve private
companies. And these companies profit from it,” he said. Meanwhile, Tapang said that
the oil crisis requires a comprehensive solution. “A local oil industry
encompassing regular as well as alternative sources should be developed. The
country should also be manufacturing machines suited for locally-produced oil
and other energy sources. Agricultural production should also be geared for
supplying local industry with the needed raw materials including biofuels,” he
said “Since we do not have
these, the immediate answer is to scrap the oil deregulation law, which makes us
vulnerable to oil price spikes, and to nationalize the oil industry,” Tapang
said. Recently, Bolivian
president Evo Morales ordered the nationalization of natural gas fields and oil
refineries within
Bolivia. Morales also threatened
to evict foreign companies unless they cede control over production within six
months. Paying lip service “Every time there are oil
price spikes, the government hypes on the need to shift to alternative fuels.
But where are the sources?” asked Tatlonghari. “It’s just an empty hole,
leaving hope,” he said. “But what’s the reality?” Recently the government
announced another possible source of biofuel. Philippine National Oil
Corporation (PNOC) president Paul Aquino said three kilos of jehtropa seeds,
locally known as tuba-tuba, can produce one liter of oil, one of the main
ingredients in the production of bio-diesel. Tatlonghari said that since
this is still at an exploratory stage, tuba-tuba is not yet being
produced at a quantity sufficient for commercial biofuel production. And this
cannot be done immediately, Tatlonghari said, since tuba-tuba can only be
harvested and utilized after two years. Although Tatlonghari said
that the technology exists, he questioned the capacity of processing plants to
produce these biofuels. Tapang said that the
government is merely paying lip service when it announced that it is working
towards making biofuel alternatives commercially available. Tapang admitted that the
there is a good possibility that biofuels can be developed and used in the
country. The problem, he said, is in the lack of government support for the
development of sources. He said that unless the
agrarian system is restructured, “biofuel plantations would remain under the
ownership of big landlords who could control the development, production and
distribution of biofuel.” A related problem, Tapang
said, is that agricultural production and processing methods in the country are
still backward. “Coconut oil is expensive, costing P30-40 ($0.58- $0.77 at $1:
P 51.61) per liter, because methods for harvesting and processing coconut are
very slow, not mechanized and are labor-intensive. The coconut industry is
still in a backward state because landlords who own and control the production
and processing of coconuts are not interested in developing it,” he lamented. He added that the current
coconut industry is geared towards exporting copra and not for processing its
byproducts for local use. Because of this, he said, the production of coco
diesel is not enough to supply the needs of the transport sector. The Department of Energy
(DOE) said in a press release that in 2004 the country‘s demand for diesel
reached 5.4 billion liters a year. Given the increased mileage made possible by
coco diesel, the country would need 4.86 billion liters of coco diesel per year.
The DOE said that the
country produces at least 50 million liters of coco biodiesel a year. More than
half of these are produced by two private manufacturers authorized by the DOE.
Senbel Fine Chemicals, Inc. generates 25 million liters of coco diesel while RI
Chemicals Corp. produces the other 10 million liters. The public sector is
supposedly producing the remaining 15 million liters. On May 5, the DOE
accredited Chemrez Inc., which has an existing capacity of 15 million liters per
annum. Chemrez can produce 60 million liters of coco bio-diesel a year to
contribute to the government’s target of achieving 60 percent energy
self-sufficiency by 2010. Tapang also noted that a
complete shift to biofuel use would entail modification and conversion of
engines. The problem, he said, is that engines are imported and are not
designed for these kinds of fuels. But if the natural gas that the Malampaya
Deep Water Natural Gas Project produces would be used, less modification will
have to be made on current engines, he said.
Based on data from the National Statistics
Office, households use LPG and kerosene the most compared to the two other
conventional fuels namely, gas and diesel.
Tapang said “LPG could be sourced directly and
at a cheaper price from Malampaya.” At present,
Shell and Chevron Texaco equally own 45 percent of Malampaya while Korea
Electric Power Corp (KEPCO) expressed its interest to buy the remaining 10
percent. “Unless the government
gives these biofuels an edge, it could hardly compete with the Big 3 (Shell,
Caltex, and Petron),” he added. “In order to propagate its
use, the government should really exert efforts in the production and
distribution of biofuels,” Tapang said. “Otherwise, these would all remain as
lip service.” Political solutions In the midst of the oil
crisis, DOE secretary Raphael Lotilla suggested the possible reduction of tariff
duties on oil products while Malacañang proposed exempting petroleum products
from the 12 percent expanded value added tax (EVAT). Tatlonghari said, “Both
proposals show that the government is again resorting to political solutions.
These could make some people happy but has nothing to do with the strict
standards regarding supply, extraction and refinery of oil products.”
On the other hand, Tapang said these are just “knee-jerk
approaches that could not be sustained.”
Agham
records reveal that prices of diesel increased seven times while gasoline six
times from January to the first week of April this year. “This is equivalent to
the average oil price increases in 2004,” Tapang said.
He
added that oil prices increased 52 times in eight years under deregulation, as
compared to 23 times in 24 years of “allegedly regulated local oil industry.”
Another mitigating measure the government implemented was the energy
conservation program or Administrative Order No. 126. This measure aimed to
limit the use of petroleum product supplies to essential activities to reduce
their fuel consumption by 10 percent of the average monthly consumption, and to
reduce the electricity consumption as well.
“This
can help but it has a finite limit,” said Tatlonghari. “It can go only this
far.” Bulatlat © 2006 Bulatlat
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Experts say
gov’t always resorts to political solutions
Bulatlat