DEPARTMENT OF SCIENCE & TECHNOLOGY
PHILIPPINE STATISTICS AUTHORITY
2018 BANTOG DATA MEDIA AWARDS CHAMPION
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From drilling for oil to the nuclear option, DOE pursues multipronged approach to energy security
HE Philippines is a net importer of oil products. This means that the country’s fuel supply is generally sourced from abroad, making the country vulnerable to changes, or price fluctuations, in international oil-price markets.
In view of the country’s heavy reliance on imported fuel, industry stakeholders are calling for more oil and gas exploration in the country. The nine consecutive weeks of oil-price increases from August 14 to October 9—a total of P5.85 per liter for diesel, P5.05 per liter for gasoline and P4.65 per liter for kerosene—had made it more pressing for the government to exhaust all options to mitigate rising fuel prices and taxes.
‘Drill, drill, drill’
ONE proposal strongly urges the Duterte administration to be more
aggressive in its pursuit of energy self-sufficiency by launching a “Drill, Drill, Drill” program to explore and develop the country’s untapped oil and natural gas resources. Sen. Sherwin T. Gatchalian, who serves as chairman of the Senate Committee on Energy, made the call amid the latest round of global oil-price hikes, which, he said, is one of the primary drivers of the rising inflation rate that hit a nine-year high again in September at 6.7 percent. “The Philippines is blessed with rich natural resources throughout its exclusive economic zone and ex-
The quiet life of the greenback
T
By Peter Lundgreen
HE US unemployment rate is at its lowest over the past 50 years and, of course, the American economy is robust. At the same time, the US central bank—Federal Reserve Bank (Fed)—raises interest rates every quarter. This move pushes the entire yield curve up, including the important 10-year US treasury yield.
If one looks farther around the world, the oil price has gone up together with other commodities, and investors have fled from investments in Emerging Markets. In the past six to 12 months,
there has been quite a movement in many factors that should, or at least could be able to, move the US dollar or the greenback. However, as Graphic 1 shows, the dollar against the euro fluctuated around
PESO EXCHANGE RATES n US 53.7370
plus/minus 2.5 percent since midMay, which underlines a surprisingly quiet life for the greenback at the moment. When the Fed constantly hiked interest rates, I had noticed more participants in the financial markets who wondered why the dollar hasn’t trended higher since May. One could argue that the Fed has communicated so well to the financial markets, that the interest rate hikes were expected, and thus were already priced in the exchange rate. However, this is rarely the market mechanism, because in determining a foreign exchange rate, it’s difficult to price in a new future cash flow. The expectations can be priced in the short-term markets, with 3-month and 6-month durations, which makes it more interesting to buy a currency ahead of
an interest rate hike. But my own experience shows that it is primarily after the increase in interest rates, and usually after more hikes, that the positive effect of a currency becomes noticeable – which is precisely the case for the dollar. Lately, some Emerging Markets countries have realized and figured out that they need to follow the American interest rate hikes to prevent capital flight and protect their own currencies against too much pressure. It means that a growing number of countries are hiking their interest rates, which I expect will intensify in some of the old western economies such as Canada, United Kingdom and Sweden. In relative terms, this partly reduces the attractiveness of higher US dollar interest rates. Continued on A2
tended continental shelf, including natural gas and oil. Unfortunately, we have been unable to tap the full potential of these energy resources. Because of this, we have no choice but to import crude oil from oil-exporting countries, even if the price has become unconscionably high,” the lawmaker said. Based on records, the Philippines has been importing 94 percent of its oil requirements, with the total import bill jumping to $9.89 billion in 2017, or a 31.2-percent increase from the $7.54-billion import bill in 2016.
$9.89B
The Philippines’s total oil-import bill in 2017, or a 31.2-percent jump from $7.54 billion in 2016
Continued on A2
Interest rate on 10-year government bonds 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 -0.50
20 13 20 08 13 0 1 20 - 11 14 - 01 20 -02 14 - 01 20 -05 14 - 0 - 1 20 08 14 0 1 20 -11 15 -01 20 02 15 -0 1 20 - 05 15 -0 1 20 0815 01 20 - 11 16 - 01 20 -02 16 - 01 20 -05 16 - 0 - 1 20 08 16 0 1 20 -11 17 -01 20 0 2 17 -0 1 20 -0 5 17 -01 20 0 817 01 20 -11 18 -0 1 20 -0 2 18 -0 1 20 -0 5 18 - 0 -0 1 801
T
By Lenie Lectura
Germany
USA
Euro / U.S. dollar exchange rate 1.4200 1.3700 1.3200 1.2700 1.2200 1.1700 1.1200 1.0700 1.0200 2013-09-30
2014 -09-30
2015-09-30
2016 -09-30
2017-09-30
2018-09-30
Source: FRED, Fed St.Louis, USA
n JAPAN 0.4787 n UK 69.2240 n HK 6.8536 n CHINA 7.7407 n SINGAPORE 38.9229 n AUSTRALIA 37.9276 n EU 61.2226 n SAUDI ARABIA 14.3249
Source: BSP (October 25, 2018 )