Gov’t Urged to Nationalize Oil to Solve Crisis
Experts
say gov’t always resorts to political solutions
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
Bulatlat
Tuba-tuba, a possible source of
alternative fuel |
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
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