BWorld 707, PHL deficit across 7 administrations

PHL deficit across 7 administrations

May 21, 2024 | 12:02 am

By Bienvenido S. Oplas, Jr.

https://www.bworldonline.com/editors-picks/2024/05/21/596204/phl-deficit-across-7-administrations/

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Last week, the Development Budget Coordination Committee (DBCC) launched a legacy book, 50 Years in Harmony: A Historical Review of the Development Budget Coordination Committee commemorating the 50th anniversary of DBCC, which spanned from 1970 to 2020. It was held at the Department of Budget and Management (DBM) offices.

I downloaded the online copy — 321 pages — and among the contributors are DBM Undersecretary and Chief Economist Joselito R. Basilio, former DBM Ministers Jaime Laya and Alberto Romulo, National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan, former Finance Secretary Benjamin Diokno, Supreme Court Chief Justice Alexander Gesmundo, Bangko Sentral Governor Eli Remolona, and DBM Secretary Amenah Pangandaman.

Among the chapters that caught my attention was that by Mr. Diokno, “The Lifeblood of the Nation: Tax Structure, Policy and Performance in the Past 50 Years.” I like it because he summarized the fiscal performance by administration, from the old Marcos to Mr. Duterte. I include data from his two tables with this column, plus I added data from the year 2023 under President Ferdinand “Bongbong” Marcos, Jr.

Among the interesting pieces of data gleaned from these tables are the following.

One, the Ramos administration had the highest revenues/GDP ratio at 16.4%, followed by Duterte at 15.7%.

Two, when it comes to disbursements and spending, the Duterte administration had the highest at 21% of GDP followed by Estrada at 17.6%. The current Marcos Jr. administration’s is actually the highest at 22% but this covers only one year and may decline in succeeding years.

Three, when it comes to the budget deficit, again Mr. Duterte had the deepest at -5.4% followed by Estrada at -3.5%. The current BBM administration actually had a deeper deficit in 2023 at -6.2%.

I also computed the average GDP growth by administration. The Benigno Aquino, Jr. administration had the fastest growth at 6.2%. One may infer that the optimal ratio would be revenues/GDP at 14-14.5%, disbursements at 15-16% of GDP, and a budget deficit at -1.5% of GDP, as conducive to faster economic growth (see Table 1).

Controlling spending, the deficit, and borrowings while inducing more economic growth and higher revenues are the important hallmarks of fiscal discipline and responsibility. Low borrowings lead to low interest rates and low interest payment, freeing up more public resources to fund more soft and hard infrastructure. The household and corporate sectors also benefit from low interest rates that will encourage more savings and investments.

DBM Secretary Pangandaman mentioned in her chapter in the book that “In his 2022 SONA, PBBM [President Ferdinand “Bongbong” Marcos, Jr.] cited the National Government Rightsizing Program (NGRP) as a priority legislation… to streamline the operations of different agencies of the Executive branch, rightsize their organizational structure and workforce complement, improve interoperability in government agencies, and eliminate functions, programs, and projects that are already redundant, overlapping, or no longer necessary.”

I like this. It is consistent with the pursuit of fiscal discipline and responsibility.

Meanwhile, the current DBCC is focused on attaining GDP growth targets of 6-7% in 2024, 6.5 to 7.5% in 2025, then 6.5 to 8% in 2026-2028. The deficit level remains deep at -6.2% last year, with targets of -5.6% this year, -5.2% next year, -4.7%, -4.1%, and -3.7% in 2026, 2027, and 2028 respectively.

The biggest threat to controlling the deficit and borrowings is the continuing noise about war preparations vs China over rocks that are 700-800 kms away from the shores of Metro Manila. I think we should put more trust in the Department of Foreign Affairs in resolving maritime use over disputed territories with China, Vietnam, other Asian claimants. Spending P2 trillion for the Armed Forces’ procurement alone (of submarines, battleships, and missiles) when we do not even have the funds to build more flyovers in many traffic-choke cities and municipalities in the country, is a very wasteful, and is irrational use of borrowed money.

GOLD RESERVES
Meanwhile, as the US Dollar as reserve currency is being weaponized against countries and economies that do not obey the political and military agenda of the US, more countries are slowly building up their gold reserves instead. Member countries of BRICS (Brazil, Russia, India, China, South Africa) and some aspiring members like those from the Middle East and Africa are showing slow but consistent building of their gold reserves.

The G7 member-countries except Canada have high but static levels of gold reserves: the US has 8,130 tons; Germany 3,350 tons; Italy 2,450 tons; France 2,440 tons; the UK 310 tons; Japan 765 in 2019, to 846 in 2021-2024; and Canada, none.

Thailand and Singapore are also taking this path while the Philippines reduced then recently started building up its gold reserves (see Table 2).

Last Friday saw gold prices reaching a new all-time high of $2,400+ per ounce. This is an indicator that demand is rising faster than supply, and the trend will continue so long as the US Dollar continues to be a weaponized currency to prop up its political agenda instead of promoting more trade and commerce in the world.

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See also:

BWorld 704, On declining inflation and unemployment, and trade with China

BWorld 705, PHL growth resilience amid a deteriorating global economy

BWorld 706, On economic growth, nuclear energy, and Meralco franchise

 

Tax Cut 40, The P60 B/year question: Who benefits from higher tobacco taxation?

This is my ppt last Tuesday.

See also:
Tax Cut 37, Marginal tax rate, June 19, 2023
Tax Cut 38, My paper in 2021 about tobacco taxes and smuggling, June 29, 2023

Tax Cut 39, Tobacco tax rates and illicit trade, August 18, 2023

BWorld 706, On economic growth, nuclear energy, and Meralco franchise

On economic growth, nuclear energy, and Meralco franchise

May 16, 2024 | 12:02 am

My Cup Of Liberty

By Bienvenido S. Oplas, Jr.

FacebookMessenger

https://www.bworldonline.com/editors-picks/2024/05/16/595240/on-economic-growth-nuclear-energy-and-meralco-franchise/

The countries that are most resolutely on the path towards “net zero,” “decarbonization,” and “denuclearization” — the UK and Germany — are also on the path towards degrowth and deindustrialization. Other European countries are on the same path towards economic suicide. Here is their GDP growth in Q1 2023, Q4 2023, and Q1 2024, respectively: Germany: 0.1%, -0.2%, -0.2%; the UK: -0.3%, -0.2%, 0.2%; Italy: 2.2%, 0.7%, 0.6%; France: 0.8%, 1.1%, 1.1%; Ireland: 1.1%, -8.7%, -0.8%; Sweden: 1.7%, -0.2%, -1.1%; and Austria: 1.8%, -1.4%, -1.3%.

Germany shut down its last nuclear power plant in April 2023 while it reduced its number of coal plants. So, it must now rely on domestic intermittent wind-solar power plus import nuclear power from France, Belgium, and Sweden to avoid blackouts.

Economic growth and security is better assured if there is energy security. Nuclear power has been an old, proven reliable energy source since the 1950s in Europe and the US. Now Europeans that started with high nuclear capacity and have “denuclearized,” like Germany and the UK, are suffering from low growth if not degrowth. Meanwhile Asian countries that ramped up their nuclear power capacity are enjoying faster growth, like China, South Korea, and India (see Table 1).

 I like this observation made by Lino Bernardo, Head of Energy Transition Projects of Aboitiz Power, and among my fellow travelers from government, corporate, and local media, on the Philippines Nuclear Trade Mission to Canada last March. He said, “A national nuclear energy program can only take off once clear policies have been laid and a regulatory regime is enforced. Nuclear power has high-capacity factor and long asset life but [is] paired with high upfront capital costs. The costs of emerging nuclear technologies must come down before it becomes commercially feasible for developing countries like the Philippines, making its adoption more later than sooner. Building nuclear energy assets requires flawless execution, holistic planning from commissioning to decommissioning, and preparations on human capital development must begin as soon as possible.”

MERALCO FRANCHISE RENEWAL
House Committee on Ways and Means Chairman Joey Salceda made a good observation that “The case for renewing Meralco’s franchise is plain and simple: it has complied with the conditions of the franchise law and it is good for the economy and the consumer… At least 29 municipalities and cities and at least four provinces outside the franchise area have formally expressed interest to be served by Meralco.” See BusinessWorld’s report this week, “Lawmaker bats for Meralco service expansion, cites economic benefits” (May 14).

The Meralco franchise area covers the whole of the National Capital Region (NCR) or Metro Manila, the five provinces of Calabarzon (the whole of Cavite and Rizal, and portions of Batangas, Laguna, and Quezon), and parts of the Central Luzon region (the whole of Bulacan and parts of Pampanga).

I checked the regional breakdown of the Philippines’ GDP. The Meralco franchise area covers the top three largest economic regions of the country. Since energy is development, by assuring energy security in these areas, the company has assured their economic security. Notice the faster growth of the NCR over the national GDP in the 2003-2009 period, and faster growth of Calabarzon and Central Luzon than the national GDP in the 2010-2023 period (see Table 2)

I am from Negros Occidental. There are five electric cooperatives (ECs) there, plus three ECs in neighboring Negros Oriental, for a total of eight ECs in a single island, eight legislative franchise laws from Congress, and eight entities to be monitored by the Energy Regulatory Commission (ERC) and the public. 

That Meralco delivers the efficient distribution of electricity with minimal blackouts compared to many provinces in the country should be taken by Congress as a model to consolidate those eight ECs in our island into one franchise to be administered by experienced corporate distribution utilities.

COAL AS WORKHORSE VS BLACKOUT
I read about some groups blaming coal plants as the “cause” of the frequent yellow-red alerts in the Philippines, especially during the hot months of March to April. Far out! They are churning out fake news. Data from the Independent Electricity Market Operator of the Philippines (IEMOP) shows that it was precisely coal power that saved the country from potential horrible blackouts this year and previous years, contributing 62% to 65% of total power generation in 2023 and 2024 (see Table 3).

But since only “brownfield” coal investments are now allowed in the Philippines, and the existing gas plants will not be sufficient to provide additional large increases in power supply in the coming years, we have to consider the use of nuclear energy in the country, from reviving or refurbishing the Bataan nuclear plant to building new small modular reactors (SMRs). Then that would assure our economic security.

See also:
BWorld 703, Six myths about thin power reserves

BWorld 704, On declining inflation and unemployment, and trade with China

BWorld 705, PHL growth resilience amid a deteriorating global economy

Energy 176, Coal news, continuing yellow-red alerts

Some recent news about coal energy that I saw. Enjoy.

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1. Not Zero? NSW State Government to Pay up to $225 Million per Annum to a Single Coal Plant to Remain Open

Eric Worrall  May 23, 2024

https://wattsupwiththat.com/2024/05/23/net-zero-nsw-state-government-to-pay-225-million-per-annum-to-a-single-coal-plant/

2. Fears Eraring subsidies will need to be extended

Ben Potter and Elouise Fowler  May 23, 2024 

https://www.afr.com/policy/energy-and-climate/nsw-to-pay-origin-up-to-225m-a-year-to-keep-eraring-open-until-2027-20240523-p5jfxc

3. Coal’s Importance For Solar Panel Manufacturing

Dr. Lars Schernikau  May 23, 2024

https://wattsupwiththat.com/2024/05/23/coals-importance-for-solar-panel-manufacturing/

4. Coal Still Powers More U.S. Electricity Than Any Renewable Energy Source

By Tsvetana Paraskova - May 20, 2024

https://oilprice.com/Energy/Coal/Coal-Still-Powers-More-US-Electricity-Than-Any-Renewable-Energy-Source.html

5. Asia Embraces Coal as the U.S. Rejects It

By Vijay Jayaraj May 08, 2024

https://realclearwire.com/articles/2024/05/08/asia_embraces_coal_as_the_us_rejects_it_1030384.html

6. G7 Agrees To End Coal Use But Can It?

By Irina Slav - May 04, 2024

https://oilprice.com/Energy/Coal/G7-Agrees-To-End-Coal-Use-But-Can-It.html

7. The emissions and trade flows impact of the G7 coal pledge

By Gavin Maguire May 2, 2024

https://www.reuters.com/business/energy/emissions-trade-flows-impact-g7-coal-pledge-maguire-2024-04-30/

8. What is U.S. electricity generation by energy source?

https://www.eia.gov/tools/faqs/faq.php?id=427&t=2

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Since last week until this week, there were yellow-red alerts about every other day, even last Sunday evening until midnight there was yellow alert in Luzon grid, and it was cloudy or raining  practically all day.

Even if power demand has declined due to cooler, cloudy days, supply margin deficiency and/or transmission issue persists.

Meralco is mobilizing big electricity consumers like factories to turn on their big gensets via interruptible load program (ILP), about 300 MW total, they stop getting electricity from Meralco temporarily so that Meralco can avoid imposing rotational blackout on smaller and medium size consumers like houses and offices. 

All these gensets under ILP are running on diesel, fossil fuel. Again, thanks to fossil fuel for saving these companies and the rest of households from blackout. 

Instead of many small gensets, 1 MW, 3 MW etc total 300 MW, we should have 2 or 3 big peaking plants on diesel or oil bunker. The price will increase but it's a lot better than enduring blackout. Compare the pain of few pesos per kwh increase vs the gain of saving food in the refrigerator, higher employees productivity because of aircon use.

All the drama vs fossil fuel do not make sense and should stop. Many days that are cloudy, and there is hardly any wind movement too. So both solar and wind output is near zero even at daytime.

Our ASEAN neighbors are non fan of climate climate. They subsidize their domestic fossil fuels, Malaysia has oil, Thailand and Vietnam have gas, indonesia has huge coal prodn. PH has  gas but it's taxed, the Malampaya royalties.

Our petroleum use is slapped with excise tax, diesel from zero to P6/liter, gasoline from P4 to P10/liter starting 2018 under Train law, to help "save the planet." So the cost of tractors, harvesters, irrig pumps, trucking, fishing boats etc have gone up bec they all use diesel. That contributed to high food inflation.

Our imported coal tax also increased by Train law from P10 to P150/ton. Former NEDA chief Ciel Habito was the main agitator and lobbyist for coal tax, he wanted P600/ton, to save the planet. Indonesia is laughing bec they subsidize their coal.

Big manufacturing plants are forced to run on liquid fuel via gensets instead of electric fuel, all these EV EV pushing and lobbying shd stop. Supply is not enough for households, offices, mfg plants, malls, hospitals, etc. Cars shd get out using more electricity, they shd use liquid fuel. The EV EV pushing to save the planet is another formula for more blackout and underdevelopment.

Power, electricity, kuryente. Everyone wants it, more, plentier, bountiful. An ord house that used to have electric fans only now have 1 or 2 aircon.

Gcash alone shd have hundreds of powerful computers handling millions of transactions per hour.

Grab alone shd also have hundreds or thousands of computers handling millions of bookings and mobility updates per hour. And so on. Kuryente, electricity, more.

And planet saviors and climate drama say we shd have limited power use unless it comes from wind solar. What a brain dead formulation.

The data centers, they are huge electricity users, 24/7 non stop, no blackout even for minute.

They need huge baseload power plants, like nuclear, coal and gas plants. We shd have more of these plants in the country, and then we can aspire to be upper middle income country (UMIC), then aspire to be an industrial country in 1-2 decades. Huge power generation like 5,000 to 10,000 kWh/person/year. Currently we only have 1,000+ kWh/person/year.

And at the PEB last Monday there was mention of having 300,000 EVs by 2028 or something. EVs are also heavy electricity users, they will compete for already thin power reserves. I think we shd entertain expanding the EVs only if we reach power generation of at least 1,800 kWh/person/year bec that would mean we have zero yellow red alerts anymore. 

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See also: 
Energy 173, Nuclear power renaissance, December 15, 2023
Energy 174, NGCP and the big Panay blackout last Jan. 2, January 11, 2024

Energy 175, Toronto's bright lights, March 09, 2024

BWorld 705, PHL growth resilience amid a deteriorating global economy

PHL growth resilience amid a deteriorating global economy

May 14, 2024 | 12:02 am

My Cup Of Liberty

By Bienvenido S. Oplas, JrFacebookMessengerTwitterLinkedInShar

https://www.bworldonline.com/editors-picks/2024/05/14/594669/phl-growth-resilience-amid-a-deteriorating-global-economy/

Last week, the Philippine Statistics Authority (PSA) released the growth data of the first quarter (Q1) of 2024. It was 5.7%, lower than the projected 6% or higher. Economic pessimists jumped on the discrepancy to say that they were correct in their regular attacks against the policies of the current government economic team and the administration. Except that they forgot about or deliberately omitted showing the growth rate of our Asian neighbors and other countries in the world.

In Q1 2024, Taiwan had the fastest gross domestic product (GDP) growth at 6.5% — but it was more of a base effect as Taiwan’s economy contracted by -3.5% in Q1 2023. So, Vietnam and Philippines were the co-leaders when it came to fast growth in Q1 — but then again, Vietnam was also coming from a low base, low growth in Q1 2023, while the Philippines was coming from a high base, high growth in the same period. Thus, the Philippines is the best performing major economy in the world, except perhaps for India — but they have not released their Q1 2024 GDP data yet.

Another indicator of economic dynamism, or lack of it, is the Manufacturing Purchasing Manager’s Index (PMI). An index above 50 is good, meaning that purchasing managers are optimistic about the economy in the coming months and quarters. An index below 50 is bad, while one below 47 is horribly bad. For the accompanying table, I took the April 2024 PMI and that from six months before, October 2023. The Philippines had a high PMI of 52.

Many G7 countries and other European nations are already on the path of degrowth and deindustrialization. These include Germany, Italy, the UK, Austria, Sweden, Ireland, Finland, and so on. They are also the same countries with bad or horribly bad PMIs (see Table 1).

Finance Secretary Ralph G. Recto made a good observation about the 5.7% growth, saying that “More than our performance in the region, what is to be celebrated here is the encouraging growth seen in the manufacturing sector as it is the most crucial sector for long-term employment, productivity, value-added generation, and innovation. This sets the course for the Philippines to become a premier manufacturing hub in Asia.”

Budget Secretary Amenah F. Pangandaman noted the role of fiscal discipline in sustaining growth: “I am confident that growth will accelerate further in the coming quarters as we prioritize shovel-ready projects for a more efficient implementation of the Build-Better-More program… We also look forward to the passage of the new Government Procurement Reform Act, which will boost efficiency in procurement and exponentially improve budget utilization.”

Secretary Arsenio M. Balisacan of the National Economic and Development Authority (NEDA) reiterated the optimistic view that “with hard work and the right policies in place, we are confident that we will achieve our growth target of 6-7% this year.”

I support the optimism of the economic team. I laugh at the pessimism of the detractors who do not include the deteriorating global economic environment in their constant criticism and yet the Philippine economy is able to stand tall.

Looking now at the details of the sectoral performance of the Philippine economy, in GDP by expenditure or the demand side, the main driver of the 5.7% growth in Q1 were the Exports of Services (15.6% of GDP in Q1 2024) — BPO, the tourism sub-sectors, even POGOs — which grew at 8.9%. Household consumption (which makes up 75% of GDP) had modest growth of only 4.6%, while Investments and government consumption had low growth of only 1.7% and 1.3% respectively.

Looking at the GDP by industry origin or the supply side, the growth drivers were the services sector (which comprised 62% of GDP) with 6.9% growth led by Accommodation and food services with growth of 14%, and financial and insurance activities with 10% growth. Industry makes up 30% of GDP and had 5.1% growth.

The Manufacturing sub-sector (20% of GDP) grew by 4.5%. Low growth in agriculture, forestry, and fishery is shown by their low output — only P446 billion — in Q1 this year, with little expansion from their P441 billion output in Q1 2019 (see Table 2).

Mining is really an under-rated and unrecognized growth driver. In Q1 2024, mining and quarrying output was P43.3 billion (constant prices), even lower than its Q1 2019 output of P45.6 billion. This was among the topics discussed in the Stratbase ADR Institute’s mining conference last Friday, May 10, at the Makati Diamond Residences. Environment Secretary Ma. Antonia Yulo-Loyzaga and NEDA Secretary Balisacan were the keynote speakers. The ambassadors of Australia, Canada, Japan, and the European Union were also among the speakers.

Meanwhile, here are two conferences that I will be attending.

Lunas Pilipinas and the Concerned Doctors and Citizens of the Philippines (CDC PH) will be holding a conference on May 18 at the University of Asia and the Pacific (UA&P) with the theme, “Healing from COVID Lockdown and Mandatory Vaccination: From trauma and tragedy to resilience and victory.” Among the speakers will be BusinessWorld columnist Jemy Gatdula, who is the Dean of UA&P College of Law; Dr. Romy Quijano, a retired professor of Pharmacology and Toxicology at the UP College of Medicine; and Dr. Marivic Villa, a pulmonologist, internist, and practitioner of critical care, and anti-aging medicine based in Florida, USA, who is also President of CDC PH.

I will also be attending the BusinessWorld Economic Forum on May 22 at the Grand Hyatt Manila in BGC, Taguig, with the theme “PH Next: Growth Drivers.” The keynote speakers will be NEDA’s Mr. Balisacan, and JG Summit President and CEO Lance Y. Gokongwei. Other speakers will be the corporate leaders of Angkas, Aboitiz InfraCapital, Converge, Globe, Grab, EastWest Bank, Lazada, Maya, GCash, CICC, PEZA, Destileria Limtuaco, ACEN, FirstGen, Meralco, and IEMOP. 

See also:
BWorld 702, Privatize assets to cut debt
BWorld 703, Six myths about thin power reserves

BWorld 704, On declining inflation and unemployment, and trade with China

Macroecon 28, Growth forecast 2024-2025

GDP growth actual 2022 and 2023, and Forecast 2024-2025 by the IMF, World Econ. Outlook April 2024.

But from actual Q1 2024 performance, many Europeans are in degrowth -- either very low growth or contraction -- status already. Data from Trading Economics.

Save the planet, save Zelensky and Ukraine. Fine goals except that perhaps they forgot to save their own economies and jobs.
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See also:
Macroecon 25, Realistic growth and revenue target, March 23, 2024
Macroecon 26, Trade, FDI and "strong" US$, April 23, 2024

Macroecon 27, Q1 2024 growth of Europe and Asia, May 16, 2024

BWorld 704, On declining inflation and unemployment, and trade with China

On declining inflation and unemployment, and trade with China
May 9, 2024 | 12:02 am

My Cup Of Liberty
By Bienvenido S. Oplas, Jr.
https://www.bworldonline.com/opinion/2024/05/09/593582/on-declining-inflation-and-unemployment-and-trade-with-china/

This week, the Philippine Statistics Authority (PSA) released three important pieces of economic data — the inflation rate for April, and the unemployment rate and international trade numbers for March. To put the Philip-pines data in context, I update the data for other countries to see what the trends are over the past few years or quarters.

DECLINING INFLATION RATE

The Philippines’ inflation rate continues its deceleration at 3.8% in April 2024 vs 6.6% in April 2023 — this is good.

This same trend is true for many other countries and the challenge for the various stakeholders here is how to bring this down further, to below 3%, in the coming months. Especially the food inflation rate which remains stubbornly high at 5.6% and 6% in March and April this year, versus the overall inflation rate of 3.7% and 3.8% over the same period.

There have been various proposals to amend the Rice Tariffication Law and thus help reduce rice and food prices, but one thing that seems missing in these proposals is to encourage large-scale corporate rice farming to sig-nificantly increase output and reduce crop losses and waste, especially in the harvesting, drying and milling phases. Thailand and Vietnam are doing large-scale corporate farming. This plus their favorable geography — they have wide swathes of flat land with access to huge water bodies like the Mekong River and Ton le sap River — is why they are major rice exporters.

DECLINING UNEMPLOYMENT RATE

The country’s unemployment rate in January, February, and March 2023 were 4.8%, 4.8%, and 4.7% respectively. Over the same months in 2024 the unemployment rate was 4.5%, 3.5%, and 3.9%. Our job generation situation is improving — this is good.

Many countries do not share the same trend as many of them have seen either flat or rising unemployment rates in Q1 2024 vs Q1 2023, including all G7 industrial countries except Italy, and other East Asians except Indone-sia (see Table 1).

So, congratulations to the Philippines’ economic team for steering the country away from the trend of flat or rising unemployment rates seen in many countries in the world.

NO. 1 TRADE PARTNER

Looking at total merchandise trade (exports plus imports) per country from 2021 to Q1 2024, we see that China is our No. 1 trade partner, with a 19.6% average of total trade over this period. This is followed by Japan with 10.8%, the US with 10%, South Korea with 6.5%, Hong Kong with 6.2%, Singapore with 5.4%, Thailand with 5.3%, and Malaysia with 4.2%.

The yearly exports and imports over these four years are shown in Table 2. I did not include columns for total trade in million dollars and percent share to total for purposes of brevity.

But with the ongoing political noise and lobbying for war preparations versus China — a very dangerous, very costly, and backward maneuver — we have to ask our people and businesses if they are prepared for the mas-sive trade distortions that could result if the situation would further deteriorate?

We have progressed far since World War 2, which ended in September 1945. We have had nearly 80 years of peace, with no world or regional wars. People are conducting more trade and commerce, and there have been more tourism and investment flows across countries and continents for eight decades. Conflicts were discussed peacefully without resorting to shooting.

We should avoid taking sides in the deteriorating conflicts of the US vs Russia in Ukraine, the US vs Iran in the Middle East, and the US vs China in Taiwan and the South China Sea. Our main concern should remain high economic growth, sustained fast growth and job creation for our people.

We should want more trade and investments promotion, not war preparations; more negotiations and international diplomacy, not saber rattling. Our tax money should be used for more physical infrastructure here, not for the purchase of unproductive submarines, battleships, and missiles.
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See also:
BWorld 701, A dying free market movement in the world
BWorld 702, Privatize assets to cut debt
BWorld 703, Six myths about thin power reserves

Climate 109, Some failed climate predictions

Here's a few of many failed climate predictions.

1. Al Gore Said the Ice Caps would be Gone by 2014 – Yes 2014!
Martin Armstrong May 15, 2024
https://www.armstrongeconomics.com/world-news/climate/al-gore-said-the-ice-caps-would-be-gold-by-2014-yes-2014/

2. Gore: Polar ice cap may disappear by summer 2014
Dec 14, 2009
http://content.usatoday.com/communities/ondeadline/post/2009/12/gore-new-study-sees-nearly-ice-free-arctic-summer-ice-cap-as-early-as-2014/1#.XVm6Py2ZNu3

3. Arctic summers ice-free 'by 2013'
Jonathan Amos  12 December 2007
http://news.bbc.co.uk/2/hi/science/nature/7139797.stm

4. Ice-free Arctic in two years heralds methane catastrophe – scientist
Nafeez Ahmed  24 Jul 2013
https://www.theguardian.com/environment/earth-insight/2013/jul/24/arctic-ice-free-methane-economy-catastrophe

5.  7 Enviro Predictions From Earth Day 1970 That Were Just Dead Wrong
ANDREW FOLLETT  April 22, 2016
https://dailycaller.com/2016/04/22/7-enviro-predictions-from-earth-day-1970-that-were-just-dead-wrong/

1: “Civilization Will End Within 15 Or 30 Years”

4: “Demographers Agree Almost Unanimously … Thirty Years From Now, The Entire World … Will Be In Famine” (

7: “By The Year 2000 … There Won’t Be Any More Crude Oil”

6. Snowfalls are now just a thing of the past
Charles Onians  20 March 2000
https://web.archive.org/web/20150912124604/http:/www.independent.co.uk/environment/snowfalls-are-now-just-a-thing-of-the-past-724017.html

How to do climate scare mongering? 

When it's cold, just report the actual temp, like below 10 C in Baguio, below 20 C in QC last January 27. No "cold index" being made by PAGASA. 

When it's hot, exaggerate it by constructing a "heat index" which are +10 C, even +14 C over actual temperature. And people keep spreading how scary burning boiling sizzling the planet is. Climate alarmism exaggeration, done, check.

Climate double talk.

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See also:
Climate 106, Triple-dip La Nina and El Nino 2023-2024, March 07, 2024
Climate 107, Sea ice melt-grow cycle, storms strong-weak cycle, COP meetings, April 06, 2024 
Climate 108, Masdan mo ang kapaligiran (1978), April 21, 2024

BWorld 703, Six myths about thin power reserves

Six myths about thin power reserves
May 7, 2024 | 12:02 am

My Cup Of Liberty
By Bienvenido S. Oplas, Jr.
https://www.bworldonline.com/opinion/2024/05/07/593044/six-myths-about-thin-power-reserves/

There have been plenty of power deficit incidents recently in the Philippines, with reports on yellow and red alerts starting from April 18 up to May 2. I counted at least 10 stories on this in BusinessWorld alone, including “Visayas under red alert; yellow raised over Luzon” (April 18), “Coal plant moratorium to stay — DoE” (April 26), “Yellow alert raised over Luzon grid” (May 2), and “ERC to suspend WESM trading when Luzon and Visayas are under red alert” (May 2).

Many analyses have been presented explaining why those yellow-red alerts happened. While many assessments are rational, I find others faulty, to say the least. Here are some myths related to the yellow-red alerts:

1. Renewables were not pushed hard enough to replace old, ageing coal and oil plants, leading to the thin power supply.

2. No new power plants went online during the Duterte administration (2016-2022), again leading to the thin power supply.

3. There was a moratorium on the construction of new coal plants from 2020 onwards, ibid.

4. The problem is not in transmission, only in generation.

5. The price control on electricity protects the consumers (bear with me, there is a connection to thin power supplies).

6. El Niño is getting stronger than La Niña, leading to a rising demand for power.

Points one to two are belied by the numbers in Table 1.

One, the number of solar and biomass plants increased during the past administration, from 38 and 19 respectively in 2016, to 61 and 36 in 2022. Over the same period, solar generation doubled while biomass almost tripled. For wind power, the projected generation this year is almost four times the level of 2022, while solar output this year will be nearly double that in 2022.

Two, between 2016 and 2022, 20 new coal plants were added to the grids (see Table 1). In the Luzon grid, the biggest coal power plant addition was GN Power Dinginin with 1,450 megawatts (MW). It became operational in 2021 and 2022. In the Visayas grid, the biggest addition was the coal-powered Therma Visayas, Inc. (TVI) with 338 MW which became operational in 2019. And in the Mindanao grid, the biggest addition was the coal-powered GN Power Kauswagan with 604 MW which became operational in 2019-2020.

Then we come to the third myth, that there was a moratorium on the construction of coal-powered plants. In the Department of Energy (DoE) website, I came across the “Advisory on the Moratorium of Endorsements for Greenfield Coal-fired Power Projects…” dated Dec. 22, 2020. It said that coal plants are still ALLOWED to be constructed: “… any coal-fired power project in any of the following parameters will not be affected: (a) Committed power projects, (b) Existing power plant complexes which already have firm expansion plans, (c) Indicative power projects with substantial accomplishment… with signed and notarized acquisition of land or Lease Agreement… With approved permits or Resolutions from LGUs…”

The DoE’s projections see the continued annual increase in coal generation until 2030 and beyond, but the projected share of coal to the total will decline from 60% in 2022 to 47.6% in 2030 while the share of wind plus solar will increase from 2.5% in 2022 to 17.3% in 2030 (see Table 2).

We then come to the fourth myth, that the problem is not in transmission, only in generation. But when it comes to the grid code requirements for ancillary services, the system operator, the National Grid Corp. of the Philippines (NGCP), has been non-compliant. The NGCP’s franchise was given in 2008 and the firm contracting of reserve requirements was made only after about a decade — but at an insufficient amount. See these stories in relation to this point: “Energy dep’t to require more firm contracts for reserve power” (BusinessWorld, Dec. 25, 2019) and “DoE Pushes NGCP to Contract Sufficient Power Reserves for Energy Reliability” (DoE website, April 24, 2021).

Energy Regulatory Commission Chairperson Monalisa Dimalanta has said that they “penalized the NGCP in November 2022 for not complying with DoE directives on the reserves contracting.

“They paid the penalty and launched the Competitive Selection Process (CSP). They did not get enough offers though so the total contracted capacity is still not at required levels, but the operation of the reserves market allowed NGCP to source that capacity from the market.”

Let us discuss the fifth point: The price control on electricity protects the consumers. I consider the price control via the primary and secondary price cap at the Wholesale Electricity Spot Market (WESM) as anti-consumer. The short-term benefit of a forced lower price is easily negated by an insufficient power supply while demand keeps rising, which leads to even higher price spikes in the medium- to long-term. Also contributing to the situation are the unacted upon supply contracts between generation companies (gencos) and distribution utilities/electric cooperatives, which involve years of waiting for regulatory approvals. Gencos will hesitate to expand their supply capacity if they are in danger of losing money, and the public then suffers via frequent threats of blackout. Keeping prices low therefore leads to yellow and red alerts.

Finally, we come to the sixth point: that El Niño is getting stronger than La Niña, leading to a rising demand for power. The El Niño-La Niña cycle is natural and has been regularly occurring since planet Earth was born some 4.6 billion years ago, so the current El Niño had been predicted to happen after the triple-dip La Niña of 2020-2023, and it is 100% certain that La Niña will happen again — it is projected to appear around July-August this year. Then we prepare for colder temperatures, more rains and floods. This is shown by actual data over the past seven decades (see Figure 1). Demand will rise because of El Niño’s heat (leading to yellow and red alerts because demand is stronger than the supply of electricity), but not because El Niño is getting stronger than La Niña (during which time demand should fall).

To remedy the continuing thin power reserves and frequent yellow-red alerts, the NGCP as system operator be monitored for strict compliance with grid code reserve requirements; price controls at WESM should be removed, and the approval of market-determined power supply contracts should be hastened; we should also hasten the integration of nuclear power in the power system; and, we should ultimately ditch climate alarmism and embrace energy realism, recognizing that the warming-cooling cycle is natural.
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See also:
BWorld 700, On nuclear energy, LFSCOE, and the red-yellow alerts
BWorld 701, A dying free market movement in the world
BWorld 702, Privatize assets to cut debt