Sunday, 8 May 2011

Adult decision-making

WEDNESDAY, 06 APRIL 2011 20:29
Business Mirror

Local television newscasts are often more about reacting to the events of the day rather than reporting what happened. While watching the day before yesterday, I thought one anchor’s head was going to explode as he talked about the electricity-rate increase due next month.

It would not be so bad if there was some actual analysis and explanation, but too often it is like watching a child throw a tantrum when told he cannot have a piece of candy.

Instead of mentioning that crude- oil prices have increased 53 percent in the last year, the announcer whines and complains and then cuts to a story of how some “poor” person is going to be affected.

Trying to be patient with people who display their ignorance and stupidity is not something that I do well.

For those who are unhappy with the high prices for electricity, stop whining and do something about it. The choices are clear. Stop using electricity. Do without all those modern conveniences that use electricity and burn coir for lighting from indigenous, natural, renewable coconut trees. Do not mention “alternative” energy sources like solar and wind. Those technologies work very well in villages of mud and bamboo huts. There is not a single example of a so-called alternative-energy project that produced reliable power or was economically feasible. Every example that you may find shows large government financial subsidies to keep the projects alive.

The second choice is to continue to buy imported crude oil at whatever high price, and make sure that you have the money to pay for it. I know I have said this over and over. Yesterday both the Inquirer and the Philippine Star ran headlines about this issue. Since the Philippines is sitting on untapped reserves of at least 100,000 tons of gold, maybe a better headline would have been about the gold price hitting a historic high of nearly $1,460 per ounce. To put that in money terms, there is at least $4 trillion worth of just gold waiting to be extracted from under Philippine rock and soil.

You know, if I had a money tree sitting in my front yard, I would not be thinking or complaining even for one moment about high prices. I would spend all my time making sure that money tree was healthy and productive. But here in the Philippines I think policymakers are, for some reason, afraid to allow the country to become richer.

The present administration is proving to have the worst track record in attracting foreign direct investments. And its policies on mineral extraction are even worse.

From “The Chamber of Mines of the Philippines expects mining investments this year to reach $1 billion, Chamber president Benjamin Philip Romualdez said.” Pardon me if I do not get excited. That $1 billion is only slightly more than what the call-center business generates in one month. If the government had treated the call-center business the way it does the mineral- extraction industry, you would be ordering your Jollibee Chicken Joy delivery by talking to someone in Bangladesh.

If the current policies continue much longer, the mining industry will be dead in the Philippines. There is a seven- to 10-year lead time before a mine can go into commercial production. Now, companies that complied with all the rules over the last 10 years and are ready to start commercial operation are being told by this government to wait. And the waiting period has been defined as “indefinite.” It is an absolute disgrace and the highest levels of government apparently are clueless about the policies being promulgated by its departments.

The third option for cheaper electricity is to use other indigenous fuel sources like coal. The Philippines here again is sitting on a huge untapped wealth. It is estimated that the Philippines has in excess of 250 million tons of coal. It is not the highest quality of coal available but it works and it is cheaper than crude oil. But the same people who think you can get power from moon rays are fighting coal-power development.

The same people who ride dirty diesel-fueled vehicles to the anticoal rally are also clueless. This, from the high-profile environmental group, the Sierra Club: “Despite the industry’s hype, there’s no such thing as “clean coal.” But new technologies and policies can help reduce coal plants’ deadly emissions, including carbon dioxide, sulfur dioxide, mercury and nitrogen oxides.” Nothing is perfect. Coal-fueled power-generation plants being built today have greater than 90-percent removal of sulfur dioxide, nitrogen dioxide and mercury. If you are going to protest, it might be wise to know some of the information available here in the 21st century.

It is about time, and long overdue, for policymakers to start taking adult responsibility and making adult decisions for the problems that face the Philippines. The latest childish decision is the fuel subsidy for public transportation. This is ridiculous. Crude oil is going to a historic high price. If the government is going to spend P450 million to help jeepney and tricycle drivers when oil is $120 per barrel, how much is the subsidy going to be when crude rises to $180 per barrel?

The purpose of the subsidy is to help avoid the jeepney and tricycle operators having to raise their fares to the commuting public. But all those commuters work for companies that are also faced with rising fuel prices. Is San Miguel Corp. going to get a fuel subsidy to operate its hundreds of vehicles so that it does not need to raise the price of beer?

These are perilous economic times that require competent, thoughtful and comprehensive decision-making. The only questions are: From whom is it going to come? When is it going to happen?

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