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‘NO PAINLESS OPTIONS TO CUSHION OIL SHOCK’ T www.businessmirror.com.ph
HERE are “no painless options” to cushion the impact of higher oil prices in the Philippines should the Israel-Iran conflict lead to an oil crisis that could cause a surge in commodity prices, according to local economists. On Friday, the Department of Energy (DOE) Oil Industry Management Bureau (OIMB) already warned that the country should brace for a “major oil price shock” in light of the “looming Israel-Iran conflict [that] threatens critical global shipping passage.” The conflict between the two countries risks a closure or disturbance in the Strait of Hormuz, where about 20 percent of the world’s oil supply passes, according to the United States Energy Infor-
mation Administration. Earlier, news reports said two oil tankers collided in the Gulf of Oman, near the Strait of Hormuz, but authorities said there was no connection between that incident and the ongoing conflict between Israel and Iran. The incident came amid supposed reports of GPS interference experienced by certain vessels transiting through the Strait of Hormuz. “The Philippines may have to allow market prices to prevail
Sunday, June 22, 2025 Vol. 20 No. 252
P25.00 nationwide | 2 sections 12 pages | 7 DAYS A WEEK
LOOMING THREAT:
ISRAEL–IRAN CONFLICT Strait of Hormuz at risk
20% of world’s oil supply passes through Potential disruption global oil price shock n DOE warns: “Brace for a major oil price shock” n
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PETER HERMES FURIAN | DREAMSTIME.COM
By Cai U. Ordinario
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Effect on Philippines
“No painless option under an oil crisis.” — Dante Canlas, economist
Philippines Net oil importer Vulnerable to rising global oil prices n Asymmetric inflation impact (sectors reliant on oil hit harder) n May miss inflation target: 2–4% May 2025 inflation: 1.3% n n
and institute serious conservation measures [to cushion the impact of higher oil prices]. This is a painful option. [There is] no painless option under an oil crisis,” University of the Philippines economist Dante B. Canlas told the BusinessMirror. Canlas said should the conflict
SLOC
SEA LINES OF COMMUNICATION escalate, the country could see a repeat of the oil price shock of the 1970s. The country could be somewhat insulated if the Philippines were less dependent on oil. The former Socioeconomic Planning Secretary said such a scenario could lead to the country
missing the 2- to 4-percent inflation target this year. Inflation in May was at 1.3 percent for All Income Households. In the meantime, the government can resort to oil subsidies for the public transport sector and a reduction in oil excise taxes
to cushion the impact on local pump prices. Unfortunately, this will be an additional burden on the country’s already strained financial position. The country’s fiscal deficit-to-GDP ratio was pegged by the World Bank at 7.3 percent in the first three months of the year. “In the energy front, developing affordable renewable sources of energy and accelerating exploration of indigenous fuel sources are essential,” Canlas told the BusinessMirror. “On the fiscal side, given the tight deficit-debt constraint, pursuing a responsible deficit-reduction program that protects growth enhancers, such as spending for education, health and infrastructure, is vital,” he added. Meanwhile, Ateneo de Manila University Professor Leonardo Lanzona Jr. told this newspaper that the Philippines is “particularly vulnerable to oil price shocks” given its position as a net oil importer. Continued on A2
CATALYSTS OF CHANGE China’s energy strategy could offer lessons for the PHL’s carbon path A
By Wes Cabangon
S climate risks mount—rising seas, prolonged droughts, and intensified typhoons—countries face a dual challenge: how to cut emissions while sustaining economic growth. China, the world’s top emitter, is tackling this with a pragmatic mix of policy, market tools, and clean energy technologies that offer important lessons for the Philippines. One standout example is China’s use of honeycomb catalysts in its power and industrial sectors. These ceramic structures, embedded with catalytic metals, bind with pollutants like nitrogen oxides and carbon monoxide, converting them into cleaner byproducts such as nitrogen and water vapor. It’s a smart, scalable solution that reduces smog without sacrificing energy output while also creating additional jobs—an emblem of China’s strategy to modernize rather than abandon heavy industries. China’s goals are as ambitious as they are structured: Carbon peaking before 2030 n Carbon neutrality by 2060 n Over 80 percent of total energy from nonfossil sources by 2060 n
To support this, China is investing in a balanced portfolio of energy sources: nuclear, hydro, wind, solar, and advanced technologies like Carbon Capture and Storage (CCUS) and Bioenergy with Carbon Capture (BECCS). Crucially, the strategy doesn’t just focus on installed capacity—it considers real output and efficiency.
Why capacity isn’t everything
ONE frequent misconception in energy reporting is conflating installed capacity with actual elec-
tricity generated. While wind and solar have surged in capacity additions, their capacity factors—the percentage of time they actually produce power—are significantly lower than traditional sources. Power Source
Capacity Factor (%)
Nuclear
85–95
Coal
60–80
Wind
20–40
Solar
10–25
This matters when planning national grids. Wind and solar are important tools for shaving peak costs and reducing emissions, but they’re not yet substitutes for 24/7 baseload power—something nuclear, hydro, and thermal plants still do best.
The Philippine energy context
ELECTRICITY in the Philippines is among the most expensive in Southeast Asia: ₱10–₱14/kWh (~$0.18–$0.25 USD), compared to ~$0.08–$0.10 USD/kWh in Vietnam, China, and Indonesia
High energy costs hurt competitiveness, push industries offshore, and burden households. We also inherited the Bataan Nuclear Power Plant (BNPP)—a
HONEYCOMB catalysts—ceramic substrates lined with precious metals that convert harmful exhaust gases into less harmful products—are being raised for the last step in processing. WES CABANGON
NEWLY produced honeycomb catalysts ready to be sent to various heavyindustry plants across China to help meet the nation’s carbon neutrality goals while balancing energy and development needs. WES CABANGON
621-MW facility completed in 1984 but never fueled or commissioned following safety, corruption, and earthquake concerns. It cost over US$2.2 billion (roughly 10 percent of the Philippines’ external debt at the time). While the plant remains intact—and feasibility studies for rehabilitation continue—it has been plagued by maintenance costs, public distrust, and safety issues related to its proximity to fault lines and Mount Pinatubo. This history is painful, but we should view it not as a deterrent but as a lesson: poorly executed infrastructure projects can cost us dearly—yet future investments in reliable, clean energy remain essential.
Trading System (ETS) regulates over 4 billion tons of CO₂—about 40 percent of its total emissions. In 2024, China also launched its Voluntary Carbon Market (VCM), allowing businesses to trade certified emission reductions (CCERs). The Philippines is slowly building its own carbon credit ecosystem. With our biodiversity and potential for reforestation, we could play a major role in global highintegrity voluntary markets—if backed by clear frameworks, credible MRV systems (measurement, reporting, and verification), and investor confidence
able, consistent electricity. China’s model shows that it’s possible to push toward carbon neutrality without giving up industrial capacity or national growth. The Philippines must chart its own path—not by copying, but by adapting: prioritizing energy infrastructure that works for our geography, lowers electricity prices, and sustains our long-term competitiveness. Climate action doesn’t begin with sacrifice. It begins with smart investment in the kind of energy systems that let every Filipino switch the lights on—and keep them on.
Final thought: Development needs power
Wes Cabangon is currently based in Beijing, covering regional diplomacy, infrastructure, and cross-border cooperation under the 2025 China International Press Communication Center (CIPCC) program.
Clean energy, done smart
TO meet its development goals, the Philippines doesn’t need to reject fossil fuels overnight—but it must
build cleaner infrastructure that delivers reliable energy at scale. That means: n Hydropower: Already tested and ideal for our terrain n Nuclear (modern SMRs): Safer, compact, and scalable n Natural gas as a transition fuel: Cleaner than coal and dependable n Geothermal: A Filipino strength we’ve barely expanded n Wind and solar: Great for peak shaving, but still land-intensive and limited in consistent output
What we need is not just more renewables—but more reliable megawatts that bring down costs and support industry, not just headlines.
Markets matter, too: China’s carbon model
ON the policy side, China backs its carbon goals with market mechanisms. Its national Emissions
CLEAN energy isn’t just about saving the planet. It’s about powering development—and for countries like the Philippines, that starts with afford-
PESO EXCHANGE RATES n US 57.3270 n JAPAN 0.3942 n UK 77.1851 n HK 7.3030 n CHINA 7.9765 n SINGAPORE 44.5881 n AUSTRALIA 37.1135 n EU 65.9031 n KOREA 0.0416 n SAUDI ARABIA 15.2782 Source: BSP (June 20, 2025)