Asian economies must continue pursuing renewable energy (RE) projects especially after seeing the effects of the Ukraine-Russia war on fuel prices, according to the Institute for Energy Economics and Financial Analysis (IEEFA).
Sam Reynolds, energy finance analyst at IEEFA, said among the immediate effects of the geopolitical tension are for global energy prices to remain high and volatile for the near term; slower recovery from the pandemic due to rising commodity prices; and the expected renewed interest to invest in more fossil fuel infrastructures to benefit from rising prices.
“The crisis demonstrates that ramping up fossil fuel imports will only make Asian economies more vulnerable to disruptions in global commodity markets. Instead, countries can advance alternative technologies to bolster energy security,” Reynolds said in a statement.
IEEFA said in the Philippines, the immediate effect has been the sharp increase in oil prices with the government already warning that volatility in global commodity prices will continue to drive up the cost of local goods.
The group also noted that the Philippinepeso depreciated relative to the US dollar due to higher cost and foreign currency-denominated imports as the country continues to contain coronavirus cases and inflation.
Reynolds said as several factors including unexpected occurrences easily affect commodity prices, continued buildout of liquefied natural gas and other fossil fuel import infrastructure in Asia will only reinforce vulnerabilities related to energy security and economic growth.
“It is difficult to predict fossil fuel prices months in advance but renewables provide long-term economic and financial stability. Instead of increasing exposure to geopolitically unstable fossil fuel markets, it would be wise for Asian countries to maximize energy security and self-sufficiency by minimizing dependence on imported fossil fuels,” Reynolds added.
As of March 1, year-to-date price adjustments of petroleum products stand at a total net increase of P9.65 per liter for gasoline, P11.65 per liter for diesel and P10.30 per liter for kerosene, following nine straight weeks of price hikes.
Last week, the Department of Energy (DOE) called an emergency meeting with local oil companies for a “collective strategy” to ensure sufficient supply of fuel products amid steep global prices.
The DOE said apart from government led programs that include the PantawidPasada program and the fuel vouchers for registered farmers and fisherfolk, other programs led by the private sector are also being pursued.
It said among the fuel stakeholders that joined the emergency meeting were the Philippine Institute of Petroleum, Pilipinas Shell, Petron, UniOil, Chevron Philippines, FilOil, Phoenix Petroleum, Seaoil, Apex Petroleum, Jetti and Liquigaz.
DOE did not mention if specific programs were already crafted but said private sector participants assured there is no expected supply issue despite the geopolitical tensions.
The participating stakeholders also said it is “highly improbable” for the sector to resort to supply hoarding due to elasticity of fuel demand and pre-programmed product deliveries.
