Rising energy prices may hit APEC

Rising energy prices may hit APEC

Mynardo Macaraig, Agence France-Presse, Manila

Rising energy prices may arrest growth in Pacific Rim economies particularly among countries dependent on fuel imports, energy experts at an Asia-Pacific Economic Cooperation (APEC) forum warned on Thursday.

An APEC forum study on energy and security issues warned that "rising energy prices may cause growth in APEC economies to stall due to high oil import dependency and an inflexible energy supply structure."

Energy demand within APEC will grow faster than in the rest of the world, exerting long-term pressure on energy prices, it said.

Jung Yonghun, vice president of the Asia Pacific Energy Research Center (APERC), an APEC advisory group, said "economies that depend on foreign resources for energy supplies are the most vulnerable."

He cited Japan and South Korea, which import all their energy needs as examples. China and the United States, oil producers, were less vulnerable while oil-exporters like Indonesia might actually profit.

The APERC study, released at an APEC ministerial meeting on energy in the Philippine capital, cited "strong energy demand growth in Asia and North America, geopolitical instability in key energy exporting economies and constraints on infrastructure to deliver energy sources to the markets."

APERC warned that imports would eventually account for 55 percent of the region's oil supply, up from the current level of 36 percent.

Speaking at the opening of the APEC conference, Philippine Energy Secretary Vicente Perez said economic and population growth in the region would further increase demand for energy, easily exceeding local production.

"The fact that demand grows faster than supply in the long run will be a major policy concern for us," Perez said.

He cited APEC studies showing that the region's gross domestic product (GDP) would increase by 105 percent from 1999 to 2020 with the population rising by 19 percent to three billion in the same period.

This means that APEC's final energy consumption would reach 5.948 million tones of oil equivalent (MTOE) by 2020, a 58 percent increase from the 1999 figure, outstripping indigenous energy production, even from oil-rich countries within APEC.

The experts said that APEC members would need US$3.4 to $4.4 trillion in new infrastructure investment in energy until 2020 to meet this growing demand.

A statement from the energy ministers issued after Thursday's discussions, said APEC was developing "response mechanisms," for short-term disruptions to energy supplies including boosting energy investment, expanding energy choices and increasing efficiency.

"Oil supplies can be seriously interrupted by factors such as geopolitical instability, natural disasters, piracy on key sea lanes, terrorism and the intrinsic infrastructure and production features of oil supply systems," the ministers said.

Perez said the discussions did not dwell on securing power facilities and sealanes from terrorists and other threats.

APEC comprises Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, South Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, the Philippines, Russia, Singapore, Taiwan, Thailand, the United States and Vietnam.