By Myrna Velasco
The Department of Energy (DOE) was urged on Thursday by Senate Committee on Energy Chairman Sherwin T. Gatchalian to come up with short-to long-term mitigating measures that the country can lean on amid oil price shocks triggered by geopolitical events such as the drone strike on the facilities of giant oil producer Saudi Aramco last weekend.
In a resolution, Gatchalian is seeking an inquiry into the short, medium, and long-term plans of the DOE “to mitigate the adverse repercussions of supply shocks on Philippine oil supply and prices.”
As of mid-week or four days after the attack on the Saudi oil kingdom’s facilities, the anticipated cost impact of the extreme upswing in prices had already been hitting as much as P2.73 per liter.
Gatchalian said “this attack on Saudi Aramco and the brewing conflict in the region raises concerns on the availability of supply and its effect on oil prices in the Philippines, specifically in the transportation and power generation sectors.”
As fleshed out, 68 percent of petroleum consumption in the country is attributable to the transport sector; 11percent for commercial use; 5 percent for power generation; 5 percent for manufacturing, and 11 percent for other industries such as those in agriculture, mining, and construction.
Gatchalian similarly indicated that such unpropitious incidents could portend very far-reaching implications on the country’s energy security agenda.
Gatchalian prodded the DOE to be proactive in apprising the public of the consequences of certain events that could affect not just their pockets or paychecks, but other facets of their daily lives as well as the overall Philippine economy in general.
Primarily, he noted that consumers must be kept abreast of the expected impact of the Saudi Aramco attack on oil prices and supply; that the DOE must lay down its short and medium-term plans and strategies to ensure continuous and sufficient supply; and long-term plans “in order to prevent vulnerability to price shocks and insulate consumers from unexpected shortages and sharp price increases.”
The Paris-based International Energy Agency (IEA) indicated that based on its ‘regular contact’ with Saudi Energy Minister Abdulaziz bin Salman, the oil kingdom has been reiterating its commitment “to ensure that global oil markets remain well supplied,” with ample stocks that the market can also draw from in case of shortfalls.
IEA Executive Director Fatih Birol noted the “recent events are a reminder that oil security cannot be taken for granted, even at times when markets are well supplied, and that energy security remains an indispensable pillar of the global economy.”
Among the IEA-member countries, it emphasized that they hold about 1.55 billion barrels of “emergency stocks” in government-controlled agencies – which could redound to about 15 days of total world oil demand.
“These can be drawn upon in an emergency collective action and would be more than enough to offset any significant disruption in supplies for an extended period of time,” the global energy think tank said.
The IEA-member countries also has 2.9 billion barrels of industry stocks as of end-July, which is actually on a two-year high and this can cover more than a month of world oil demand.
“These stocks include about 650 million barrels of obligated emergency stocks – which can be made immediately available to the market when governments lower their holding requirements,” it said.
READ MORE: Saudi oil attack sparks global price hike