* This is my column in BusinessWorld last December 28, 2018.
My list of top energy-related news that transpired this year, five global and five national.
1 Despite endless noise in the world to “decarbonize” and “end fossil fuels,” reality shows that the noise is just jokes and drama. The world is still 85% dependent on fossil fuels for transportation (including the frequent jet-setting of global “planet saviors”) and electricity generation.
Also, the top six largest economies in the world based on gross domestic product (GDP) size at purchasing power parity (PPP) values are also the world’s top six largest energy consumers.
2 High coal use for power generation is inevitable for huge population countries like China and India, two countries that experienced large-scale reduction in poverty. The same is also true for industrial economies like the US, Japan, Germany, and S. Korea. The anti-coal movement tries to deny this fact but cannot escape it (see table).
3 World oil prices rose late 2017 until October 2018 and collapsed this November-December. WTI crude fell at $43-46 a barrel. Dubai crude reached almost $85 in early October and collapsed to below $60 a barrel in late December.
4 The philosophy of high oil and carbon taxes to “save the planet” was pricked big time in France. The Yellow Vest movement strongly and categorically declared that cheaper oil is more important than “fight (man-made) climate change” political concerns.
5 “Non-news” to many media outlets but actually good and big news to consumers: NO major energy catastrophes in 2018, no major oil spills, no gas blowouts, no reactor meltdowns, no major infrastructure destroyed by natural disasters.
6 High inflation was triggered primarily by high oil tax hikes under the Tax Reform for Acceleration and Inclusion (TRAIN) law; higher coal, tobacco and sugar taxes also contributed. Dutertenomics led by the Department of Finance and National Economic and Development Authority remain deniers of this fact so they will proceed with the second package of oil and coal tax hikes starting January 2019.
7 The feed-in tariff (FIT) or guaranteed high price for 20 years of wind-solar and other renewables keeps rising. What was only 4 centavos/kWh in 2015, became 12.40 centavos in 2016, 18.30 centavos in 2017, and 25.32 centavos starting June 2018. This contradicts the renewable energy (RE) lobby’s claim that RE is getting cheaper.
8 The creation of an Independent Market Operator (IMO) as explicitly provided in the Electric Power Industry Reform Act (EPIRA) of 2001 finally became a reality. Officially announced by Energy Secretary Alfonso G. Cusi in June 2018, the Independent Electricity Market Operator of the Philippines (IEMOP) was created with Atty. Francis Saturnino “Nino” Juan as its first president.
9 Uncertainties remained in the implementation of the Retail Competition and Open Access (RCOA) provision of EPIRA law after the Supreme Court issued a temporary restraining order in 2017. Voluntary participation of contestable customers with 750-999 kW consumption became wobbly and many Retail Electricity Suppliers (RES) with expiring licenses still cannot get new ones, reducing competition. IEMOP recommended the voluntary registration of contestable customers as trading participants in the WESM (Wholesale Electricity Spot Market) in lieu of their mandatory WESM registration.
10 Electricity prices have stabilized in recent years. The load-weighted average price (LWAP) at WESM in P/kWh: P5.37 in 2012, P4.19 in 2013, P4.65 in 2014, P3.64 in 2015, P2.81 in 2016, P3.28 in 2017, and around P3.45 in 2018. Low electricity prices in 2016 followed by a rise in 2017-2018 are consistent with world oil prices.
So what is the outlook for 2019?
World oil prices are projected to remain low next year but local oil prices will rise due to part two of oil tax hikes under the TRAIN law.
Electricity prices in the country are supposed to remain low and stable but will be spoiled by the upward distortion by part two of oil and coal tax hikes.
Cheap energy is good but Dutertenomics thinks this is wrong so the government must make energy become more expensive. Lousy and idiotic “public service.”---------------
BWorld 275, The LNG bill, December 28, 2018
BWorld 276, Fiscal irresponsibility vs household responsibility, December 29, 2018
BWorld 277, Contestable market and the ride-hailing sector, January 14, 2019
BWorld 278, Top 10 economic news of 2018, January 15, 2019