DOE is correct to focus on supply

Energy Secretary Rene Almendras is correct to focus on assuring oil supply because there is nothing anybody can really do about the price. Loud mouths demanding his resignation because he cannot keep prices down are simply being ignorant and unreasonable.

Not even the members of OPEC can predict and control prices. This is simply market driven. Price control on domestic petroleum prices can only mean government must subsidize the difference between world market price and domestic selling price. The private sector cannot be expected to willingly lose money.

In that same vein, I think Secretary Almendras is being less than candid when he ordered the oil companies to boost their inventories without an offer from government to pick up the increased inventory carrying cost. Only the refiners, Shell and Petron, keep inventories of over 30 days because they import crude oil for processing. The small players who only import products keep at most seven to 10 days. They have not factored inventory carrying costs in their pricing. It is unfair to even threaten them with a fine for failure to go beyond normal inventory levels.

During the 80s, we were able to keep in-country inventory of over 180 days only because government was paying for the inventory carrying cost through the OPSF. Because we didn’t have enough onshore storage tanks, we even chartered VLCCs or Very Large Crude Carriers to serve as floating storage for oil we kept as part of our strategic reserves. We are now operating on a very different system where the government plays no role in the importation of petroleum beyond monitoring.

But I remember that during our watch, we signed up an emergency petroleum sharing agreement with other government oil companies in Asean. Working through the Asean Council on Petroleum or Ascope, PNOC had arrangements with the oil companies in Malaysia, Brunei, Indonesia and Thailand for emergency oil supply. The arrangement was also ratified by the Asean Energy Ministers (ASEM).

I don’t remember any country invoking this agreement at any time despite the many scary threats to oil supply. Today however, it may be difficult to impose the agreement on Indonesia because the country has since become a net importer of oil. Malaysia has limited domestic production and I guess what they produce are already contracted for. Thailand is basically a natural gas producer. Brunei’s production level is no longer what it used to be. So it seems the region can offer little relief for us in an emergency.

We should try signing up government-to-government crude oil supply deals like we did in the past. Diplomatic missions must be launched to convince the Russians to sell us some of the oil produced in their Far East territories. That appears to be the only really viable alternative in case our Middle East sources, where 80 percent of our oil comes from, are cut off. Unfortunately, we have discarded our policy of ensuring geographic diversification of oil supply. 

This is why it was wise of Secretary Almendras to dust off existing plans to impose fuel rationing. If all hell breaks loose in the Middle East, rationing may be the only way to go. Since the rationing plan involves using the barangays for the distribution and control of ration coupons, it is good to start training them early because we may need to implement in a hurry.

As for now, the energy department should launch an all out information drive to make people realize the gravity of the potential problem to make them adopt energy saving measures. Whether we end up rationing fuel or not, it will be to everyone’s advantage to get used to making every drop of imported oil count.

Government should lead the drive with the MMDA making sure that traffic management is constantly improved. We can just imagine how much oil is wasted by all those idling vehicles on our streets every day.

Incidentally, I am glad that MMDA is constantly broadcasting the traffic situation in key arteries through Twitter. This will help people make decisions on routes to take and avoid heavy traffic areas. Maybe a more systematic broadcast would enable motorists to better plan their routes even before they get to their cars.

We have been here before… we should be able to handle this better now if we just learn from past experiences.

DFA and OFWs

I got this e-mail from a New York-based Pinoy expat reacting to our column last Monday.

You raised an interesting point about the need to better serve OFWs. I would extend the point further by saying that government should do more to promote overseas job placement for Filipinos. There is both empirical and anecdotal evidence to show that the Philippines is leaving too many opportunities on the table by not making an aggressive and concerted effort to go after thousands of potential overseas job placements.

No doubt, the Philippines has established itself as a world leader in supplying labor, but it can do more. If Filipinos can have 25 percent of the market for seafarers, there is no reason why we cannot aim for 100 percent.

Germany, on the other hand, is projected to have a shortfall of two million workers by 2020, yet today, there are only about 20,000 to 50,000 Filipinos living there. Clearly, the Philippines is not in a position to avail of Germany’s looming massive labor requirements. If it were Procter & Gamble marketing soap, they would have long gone after these segments of market space with a sense of urgency.

It would be a good idea to finally create a cabinet-level department catering to the needs of OFWs, both in terms of marketing for job placements and providing ongoing services to current Filipino workers. Both the DOLE and DFA are too stretched to address the growing needs of overseas workers and the opportunities of the overseas labor market.

Dedicating a cabinet position for OFWs is justified, considering that there are more than ten million Filipino workers overseas, whose remittances account for almost one-fifth of the country’s GDP. The department’s leaders should be skilled, strategic and passionate marketers, as well as astute bureaucrats who can anticipate needs and crises before they blow up.

Street lights

Just because we must save energy does not mean we should impose black outs on our major roads. This is particularly true in that main artery between NAIA 3 and the Domestic Terminal. It is just too dark for comfort. Given recent reports of security problems for balikbayans, tourists and even returning residents, lighting up this road is absolutely necessary.

If DPWH and the local government do not have the funds to finance lighting up this road, the Tourism Authority should use our travel taxes to fund such a project. This is one good use of the money we are forced to shell out every time we travel abroad. Paging Tourism Secretary Bertie Lim and Mark Lapid of Tourism Authority!

Good lighting is also needed in the portion of the road that runs in front of the Air Force gate under the overpass that connects the airport to the Skyway going South. It is also unbearably dark there and not a good way of welcoming our guests to our country.

On the other hand, I can understand why Tramo road needs to be darkened somehow. Last Sunday, I noticed uncollected piles of garbage along this tourist route. The Pasay City administrators ought to be ashamed of themselves for their consistent failure to present the best face of our country for so many years now. It shouldn’t be too difficult to keep a 500-meter stretch of road clean all the time.

And speaking of road hazards, Manila Water’s Gerry Ablaza ought to do extra penance this Lenten period for the failure of Manila Water to keep their contractors safety conscious. They recently dug up that main road on Fort Bonifacio leading to the airport and failed to put lights to warn motorists that they are not quite finished with their work.

The warning signs can be seen only if your car is on high beam but who would be on high beam in a two way road with heavy traffic running the other way. This absolute negligence may be expected of lesser companies but more responsibility is expected of an Ayala owned company.

Drug test

From the Professional Heckler.

According to Sen. Bongbong Marcos, the Philippines could have been a rich state like Singapore if his father had not been ousted 25 years ago.

In other news, a drug test among senators has been proposed.

Boo Chanco’s e-mail address is [email protected]. He is also on Twitter @boochanco