Trump’s war and energy damage

We are now on the fifth week of US President Donald Trump’s war against Iran and things are still bad.

I have seen some good and bad news in BusinessWorld recently. The good news: “Marcos says Philippine oil supply secure beyond 45 days” (March 26), “ASEAN summit to go ahead in May, but shortened to ‘bare bones’ program due to Middle East conflict” (March 27), and, “Manila, Beijing resume talks on South China Sea, energy security” (March 29). The bad news: “PHL growth forecast cut to 4.5% — ING” (March 29), and, “Oil-shock vulnerability blamed on deregulation” (March 29).

Country leaders, especially those from East Asia, must meet in person and craft various options to sustain growth as all of them are more badly affected by the Trump war compared to Europe, or North and South America, or Africa. They can get their oil and gas from their respective continents, but East Asia is highly dependent on Middle East oil and gas.

The Philippines should prioritize energy cooperation with China, Vietnam, and Malaysia, not bickering with China. This should include wider exploration and development of offshore oil and gas resources in the South China Sea, and sharing of these resources, technology, and investments which will produce more common benefits.

And it is simply wrong to blame oil deregulation for the current oil price shocks. We would do better to blame the climate alarmism that demonizes further development of oil, gas, and coal production, which are all very useful.

The prices of all fossil fuel products have risen. People will hate the higher prices, but they cannot honestly say, “Leave fossil fuels, save the planet.” They will prefer to save their economies, jobs, and businesses — and oil, gas, and coal produce many of the industrial by-products they use, like petrochemicals, fertilizers, and coal ash for cement production.

Non-fossil fuel sources of power — solar, wind, and nuclear — have experienced contractions in prices. Meaning investors and businesses are not rushing to go there, as they are not substitutes for fossil fuels.

Among the industrial and petrochemical products are bitumen used for asphalt and road construction, methanol for adhesives and foams, naptha for producing plastics and chemicals, sulfur and urea for fertilizers, styrene and butadiene monomers to produce synthetic rubber tires for our cars, trucks, tractors and even bicycles.

These are some of the byproducts that crude oil and gas can produce. Wind, solar, and biomass cannot produce these. Hence, investors are not rushing to wind-solar amidst the current oil and gas price and supply shocks.

Executive Secretary Ralph G. Recto announced last Sunday that the government has secured a firm order of 1.04 million barrels of diesel; the first batch will arrive this week. He added that the country will receive a steady supply of coal from Indonesia. This is good. We should see more energy diplomacy, more assurances of oil, gas, and coal supply via trade, not more war mongering.

Finally, some quick comments on three issues.

1. Some big solar plants are already in place, so we should use them. Yesterday Meralco PowerGen Corp. (MGEN) announced that its affiliate, Terra Solar Philippines, Inc. (MTerra Solar), has successfully energized the first 250 megawatts (MW) of its solar capacity. So it is now starting as an electricity producer and contributing to the country’s power needs.

MTerra Solar also energized the first of its battery energy storage system (BESS). It can deliver up to 450 megawatt-hours (MWh) of energy to the grid at night. This is largest operating BESS in the Philippines.

MGEN President and CEO Manny Rubio optimistically and correctly stated that “MTerra Solar plays an important role in supporting the country’s near-term energy requirements. The project’s phased energization enables earlier delivery of capacity to the grid, helping efforts to maintain stable electricity prices amid evolving global conditions.”

2. The real purpose of the suspension of market transactions of the Wholesale Electricity Spot Market (WESM) is not clear because market suspension is normally done during calamities like strong typhoons and earthquakes, when power plants and transmission or distribution lines are knocked out resulting in power shortages. Any available power plant anywhere then must dispatch power, and these running plants can dictate pricing, so “administered pricing” by the Energy Regulatory Commission (ERC) is done. Administered price is computed by averaging the last four weeks of similar days at similar intervals in prices.

But currently all generation companies (gencos) are available except those with scheduled maintenance. An increase in their prices is due to the rise in marginal costs, the fuel costs, and not to “market abuse” because competition is still working. If the government wants to conserve fuel and shut down certain power plants like those using diesel and bunker fuel, the easiest thing to do is for the Energy department to tell them to shut down, and not suspend market operations.

3. Earth Hour 2026, which was held last Saturday, was another failure in asking the public to “celebrate darkness for one hour.” I checked the website of the Independent Electricity Market Operator of the Philippines last Saturday night and saw that there was no decline, not even a blip, in electricity demand from 8:30-9:30 p.m. that day. People want brightness, not darkness. They want energy abundance, not energy poverty.

Bienvenido S. Oplas, Jr. is the president of Bienvenido S. Oplas, Jr. Research Consultancy Services, and Minimal Government Thinkers. He is an internationa fellow of the Tholos Foundation.