Triple whammied yet still in denial

Stock prices and the peso tumbled on President Arroyo’s admission that the country is in fiscal crisis. But that should be no worry. Rates will recover in a day or two after the initial shock. The important thing is that the Chief Executive has sounded the alarm loud enough for Filipinos to get a move on it.

Not that Arroyo all this time has been hiding her head in the sand. To be sure, she has been pleading for new taxes and shared sacrifice to weather the coming storm. Just that most would not care to listen. The few who did have taken on a free-rider stance-waiting for others to pitch in some help before they do.

The problem is staring the country in the face. For seven years the government has been operating on deficits that hit a full fourth of budgets. This year it’s P200 billion; next year it would be P340 billion. Borrowings to cover the annual revenue shortfalls have piled up to a staggering P5.4 trillion. Seeing no efforts to stem the borrowing binge, economic risk raters have downgraded the Philippine prospects for investments. This, in turn, has raised debt interest payments alone by millions of pesos a day.

Compounding the situation was a US push of interest rates, further straining RP which heavily leans on trade with America. That too led to additional million-pesos daily for debt servicing.

Then there’s the looming oil crunch. While crude prices have not tripled, unlike in the past three world shocks, the two-thirds rise since June nonetheless has made businessmen rethink expansion plans. Bracing for dark days, they’re now holding back. Less business activity and less employment means less trade and less taxes to collect.

It’s a triple whammy-and many in government itself are in denial.

State agencies and firms still spend profligately. While Arroyo is calling for cost savings, her managers are living it up on tax money and directors are voting themselves more perks. They’re infected with the not-our-money-anyway attitude of Congress. While a handful of senators and congressmen boldly have started studying new taxes, most are busy fighting over committee chairmanships with unaudited budgets. A bunch of congressmen have offered to plunk their P65-million annual pork barrels into Arroyo’s priority programs of food, jobs, water, health, electricity and education. But that was only press release. They’re now singing a different tune, offering a mere 25-percent cut in perks. Most senators are mouthing the politically expedient call of improving tax collection first before levying new ones. But, as 11 U.P. economists point out, that would take decades of change. Yet, for four years, legislators have dawdled on the very bills that can spark such reform.

A fiscal crisis is upon RP. Worse will come in two years. Maybe the executive and legislative bigwigs think they would have stashed enough loot by then to survive the storm. They might be in for a surprise of general strikes and food riots.

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My piece on deuterium (Gotcha, 20 Aug. 2004) resparked a decades-long debate on its use as fuel. Talk of the hydrogen isotope has always been heated. Some scientists dispute claims that deuterium lies in large quantity on the ocean floor. Others say that even if it’s there, no earthly technology can make man mine it, let alone convert it to fuel. Fund-raising in the ’80s for R&D in the Philippine Trench in Samar-Surigao was branded a scam.

Here’s why, according to Joel Villaseñor, PhD, of the Massachusetts Institute of Technology-Center for Space Research:

"As a scientist who works in nuclear fusion, I am familiar with the promise-and pitfalls-of fusion energy. For many decades physicists and engineers have been trying to heat and contain hot gases (‘plasma’) at temperatures of millions of degrees, using magnetic fields or intense lasers. The idea is that, at such temperatures, nuclei of light elements can repulse electrostatic force and fuse to form heavier nuclei. In this nuclear reaction, a tiny fraction of the mass is converted into kinetic energy. Deuterium and tritium (an even heavier form of hydrogen, three times the mass) are the easiest fuels to fuse, but even then the required temperature should be at least 200 million degrees. It would be quite an engineering feat to come up with such a magnetic ‘bottle’. Man has long generated massive amounts of fusion power since the first H-bomb detonation over half a century ago. But we are still decades away from building a fusion plant.

"Aside from being a ‘moderator’ for fission reactors (which are plentiful but unpopular), I don’t know how deuterium can be used as fuel. I gather that fusion is the process proposed in extracting the energy. But it is misleading to allude to deuterium as combustible.

"Deuterium’s natural abundance is a tiny fraction compared with that of hydrogen, so extracting it from the ocean means having to process huge volumes of water. Only about 0.015 percent of the hydrogen is in the form of deuterium. Using electrolysis as a method of separation is also energy-intensive. Even with the use of the cheapest form of extraction, the cost would still hover at around $300/kg. It’s not a cheap material to collect."

To which Apolonio Dalde, of Dalde Consulting in Houston, Texas, replies: "No need for fusion because volume and density pressure already separated the oxygen from the hydrogen, creating layers of deuterium on the ocean floor." Dalde is reviving interest in mining the isotope from the Philippine Deep. But he’s no physicist, and is the first to admit that techno-optimists are usually not scientists. He acknowledges too that R&D would cost billions of dollars, with no guarantee of success.

And so geologist Manuel Diaz chimes in: "Let’s just work on proven, viable alternative fuel, like ethanol from sugarcane or deisel from coconut. If we want a sophisticated source, we can have the Dutch help us to gasify coal in Semirara, technically feasible unlike this deuterium pipe dream."

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