Ukraine crisis a wake-up call to review fuel, energy needs

Time for bold reform of fuel-subsidy policy

Adelia Pratiwi
The Jakarta Post, Indonesia

The almost 59 per cent rise in international oil prices in 2021 due to the strong economic recovery and the additional increase of over 24 per cent in the last two months caused by the geopolitical conflict in Ukraine should jolt the government to reform its fuel subsidy policy to maintain prudent fiscal management and reduce dependence on fuel imports.

Before 2004, when Indonesia was still an oil exporter, it was still correct to assume that Indonesia would benefit from a rise in oil prices.

However, after 2004 when the country became a net oil importer, the situation reversed.

The Indonesian oil and gas trade deficit has risen steadily to as high as US$2.28 billion (S$3.09 billion) in December alone.

The gap is a structural problem that needs to be addressed. Indonesia therefore should cut its dependence on oil imports by increasing domestic production.

Since fuel is consumed mostly in the transportation sector, fuel consumption can be controlled or even cut down if petrol prices are increased to force motorists to use more fuel-efficient vehicles.

It has become more urgent to control the fuel subsidy because international oil prices have now become twice as high as the average price assumed for setting domestic fuel prices and subsidies this year.

The fuel subsidy scheme should be reformed with a better-targeted model. Integrated Social Welfare Data is key to determining which group of people are eligible to receive subsidies. It also needs to ensure timely and adequate social aid for the vulnerable and poor when oil price shocks happen.

Rework energy strategy to move away from Russia

Editorial
The Japan News, Japan

The price of crude oil has been soaring due to the belief that economic sanctions against Russia will disrupt supply. Japan and Europe should rework their strategies so as to break away from their dependence on Russia for energy. The price rose by more than US$20 a barrel in about a week from the start of Russia's aggression against Ukraine. Since the beginning of the year, the price has risen about US$40.

The International Energy Agency, which comprises major oil-consuming nations, has announced that member countries had agreed to a coordinated release of 60 million barrels from oil reserves. But the amount is less than a day's global consumption and will have only a limited effect on pushing down prices.

Consuming countries must take all possible measures to stabilise prices.

Japan and other oil-consuming countries need to strongly urge producing countries to increase their output.

There is a growing movement away from Russia among private energy companies.

Among the development projects in the Russian far east region of Sakhalin, in which the Japanese government and companies are participating, Exxon Mobil of the United States has decided to withdraw from Sakhalin-1, whose main operations involve crude oil, and Britain's Shell has decided to pull out of Sakhalin-2, whose main operations involve liquefied natural gas.

These are important sites for Japan. If Russia continues its aggression, the government as well as trading and other companies that have invested in the projects will have to consider withdrawing from them.

There is an urgent need for advanced nations to join forces to establish a system for flexible LNG supply in response to fluctuations in demand in each country, and then increase the number of alternative suppliers, such as Australia and the Middle East.

The rush to decarbonisation, mainly in Europe, initially led to excessive emphasis being placed on renewable energy, which hindered investment in crude oil and natural gas development and caused prices to soar.

During the transitional period to decarbonisation, it is important to continue making investments in gas fields.

The role of nuclear power, which can provide a stable supply of electricity, will also become important.

It is essential for the government to thoroughly implement safety measures and give full-scale support to the restart of nuclear reactors.

Time to escape from grip of fossil fuels

Eng Parakrama Jayasinghe
The Island, Sri Lanka

Sri Lanka is in the throes of multiple economic difficulties. Its increasing dependence on imported energy resources is the crux of the problem.

At least in the present context, the problem is the lack of necessary foreign exchange to import coal and other fossil fuels, which concurrently have increased in price.

The problem faced by every household due to the shortage of LPG - the preferred cooking fuel - is the most urgent to be resolved.

It is time to recognise that the solution lies in our ability to develop sustainable indigenous alternatives .

No doubt LPG is an attractive and convenient cooking fuel. But such benefits come at a cost, and as seen at present, even those who are ready to pay the price cannot access it.

There has been a silent revolution in the intervening years.

Innovators have independently developed several models of cooking stoves that use coconut shell charcoal, which broadly resolve the problems encountered with early designs of wood-burning stoves such as smoke and soot, and controllability to match the cooking methods of Sri Lankans.

Sri Lanka has not traditionally adopted wood charcoal as a common fuel, perhaps due to hitherto easy access to other forms of biomass, which by and large have not been unsustainable.

It is important to note that the option of using fuel wood directly is still open to those who have well ventilated kitchens.

The value of this most effective and very low-cost innovation cannot be overstated for those who can have the ready access to the fuel wood, perhaps on their own homestead at absolutely no cost.

The least the state agencies should do is to create public awareness. Sri Lanka could gain the advantage of achieving the highly desirable status of non-dependence on external sources to serve this vital segment of energy services and regain a modicum of the national pride, which is in tatters at the moment, instead of going round the world begging.

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• The View From Asia is a compilation of articles from The Straits Times' media partner Asia News Network, a grouping of 23 news media titles.