REY GAMBOA:  MORE  VOICES  AGAINST  OIL  SUBSIDIES

MANILA, July 8, 2005
 (STAR) BIZLINKS by Rey Gamboa - The jueteng scandal, the "Garci" conversation, the passage of the new EVAT law, and its suspension on the same day of it was made effective, are creating shock waves that weaken further our fragile economy. The sad part is that these are our own doing.

Another economic blow hammering us is the escalating crude prices. It is, however, not of our own doing and not within our control. But there are things that we can do to manage it. For instance, the government’s recently re-launched energy conservation campaign is a step in the right direction. That is, if the launching ceremonies would trigger concrete actions and not just end up as mere photo-ops with the president.

A number of readers had reacted to a recent column where we urged the government to desist from moving back to subsidizing petroleum product prices. Louie Tordillo of Oklahoma, USA, is strongly batting for alternative fuels made from renewable sources.

"Your recent article on OPSF (Oil Price Stabilization Fund) as a potential fiscal liability is indeed valid and meritorious. The government never should re-impose it as it will never compliment the long-term goals of fiscal management.

"I may add to suggest (that) the government support the establishment of ethanol manufacturing plants and increasing the capability to produce coco-diesel to boost supply of renewable fuels.

Going ethanol

"Because we do not have sufficient crude production, the effects of further increases in crude prices in the future can be mitigated with these measures. We have productive sugar lands that now can divert their stocks to alcohol (ethanol) production.

"I currently work with a major multinational energy company in the US and during my travels to the Midwest, I have seen the construction of new plants to produce ethanol.

"The Wall Street Journal in its recent article, termed this a ‘construction binge.’ Small towns in Indiana, Nebraska and nearby corn-producing states are joining in the bandwagon to produce and sell ethanol to the marketplace.

"Ethanol as we know is a component in producing gasoline. It acts as an oxygenate to improve emission of vehicles. Majority of these constructions are privately funded, mostly through cooperatives and local banks. The returns are above average, though the states have assisted in the bridge financing and guarantees on pricing.

"For the Philippines, there’s great potential for the local market for ethanol. In addition, exports to nearby countries cannot be discounted due to our superior sugar production technology and installed sugar refinery milling capacities. Raw sugar can easily be turned to ethanol based on current available technologies.

Consider coco-diesel

"Coco-diesel, I think is the most interesting fuel that RP has. It needs to be developed as a primary resource unique to the Philippines. The fact that we are the world’s number one producer of coconut, I see great potential for coco-diesel in the export market.

"It is known that coco-diesel-fueled vehicles produce lower particulates. What (the Philippines) needs is a comprehensive plan to develop and market the product. There should be political will (that) will lead in harnessing the full potential of this commodity.

"I am toying with the idea of proposing to the President to utilize the Cocofund as a funding source for the project. We will need the best brains of the government agencies such as PNOC (Philippine National Oil Co.), PCA (Philippine Coconut Authority) and DTI (Department of Trade and Industry) to pool together to achieve the goal of a universally acceptable fuel that rivals the best alternative to crude-derived diesel fuel.

"I believe we can tie-up with major car manufacturers overseas who are willing to co-develop the technology. It is a win-win situation for the Filipino coco-farmer, who will be the main beneficiary when this project gains worldwide acceptance."

Stopgaps and pandering approach

Juan Deiparine of Toril, Davao City, on the other hand, bewails the lack of planning that our government officials should have done before this latest round of energy crisis hit the country. Here is what he says:

"Your article in The Philippine STAR makes a lot of sense. It is unfortunate that we have a system of government that panders to the masses instead of sticking to a program of development and fiscal responsibility.

"The poor deserve to be uplifted, but when a government’s only response to fiscal crisis is to fleece the tax-paying business enterprises and the upper and middle classes, it smacks of demagoguery.

"It is business and the middle class that sustain the economy because they are the ones who bear the brunt of taxes. The masses do not even pay taxes, yet they are the loudest in demanding for their rights and privileges. And the most politically expedient way to appease the masses is by providing subsidies.

"It is unfortunate that we do not have a long-term energy policy. Since Cory Aquino’s term, developing renewable energy has been at a snail’s pace. All policies relating to energy have been stopgap. And politics poisoned the atmosphere, resulting in the very costly mothballing of our only nuclear plant.

"Oil and gas exploration have come to a virtual standstill, (and) not enough attention and incentives have been given. It was fortunate that in the 1990s, oil prices were at very low levels.

"But we never prepared for a rainy day. And now that oil prices are more than five times higher than they were in the 90s, our politicians and our masses vent their anger on the oil and power companies. Unfortunately, our oil and power companies cannot do much about the rising cost of energy.

"Petron, Shell, and Meralco only distribute fuel and power; they are not the sources. Blaming them for the high cost of energy is akin to shooting the messenger instead of doing something about the bad news. I believe our politicians know this, but they prefer to fan mass hysteria.

"Mental dishonesty is a small price to pay for the almighty vote. Of course, our politicians are also too lazy to buckle down and do the hard work of mapping out a comprehensive energy policy. That involves too much mental exercise and doesn’t get much publicity.

"If we only developed as many indigenous sources of energy as possible, we would be better able to manage energy costs. It would benefit businesses as well as the masses. More jobs will be created and, in the end, government can collect more taxes.

"I can only hope that someday we have a visionary leadership that can address the causes of poverty in our country instead of resorting to short-sighted measures for political expediency."


Reported by: Sol Jose Vanzi

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