I’ve been busy with work lately and only had time for this tidbit.

Of late, I’ve been interested in the liberalisation of the energy market in Singapore and came across this:

I think a more important point is that in a liberalised electricity market, households have already benefited, as electricity tariffs have come down by about 9.5% compared to Dec 2001, keeping oil prices constant.

The above was quoted from a speech by our Minister of State for Trade & Industry and National Development, Dr Vivian Balakrishnan, during The Committee of Supply Debate on 13 March 2004.

Well, in order to make any sense of the actual benefits to households, let’s look at oil prices on Dec 2001 and Mar 2004. Since this is going to be a relative comparison of prices between 2 points in time, all I have to do is pull both oil spot prices from the same source. Here’s a good one from Financial Forecast Center: $19.33 (Dec’01) and $36.76 (Mar’04), which works out to a 90.17% increase in oil prices. So, by Dr Balakrishna’s statement, the reduction of 9.5% of tarrifs on the same oil price would translate to 80.67% real $ increase in electricity tarrifs to households.

While Dr Balakrishna is right to give due credit to market competition, and that the only way to give credit is through positive reinforcements, I would personally view the subject matter with more criticality – for instance, as pointed out in EMA’s 2004/2005 Annual Report pages 12/13:

From a situation where more than 77% of Singapore’s total generation output was oil-fired in year 2000 at the start of the market reform, almost 70% of our total generation output is gas fired today.

A quick reference to the Financial Forecast Center’s gas prices table shows that gas prices for the same period ($2.42, $5.38) has in fact increased by 122%, more than the 90% increase in oil prices. This tells me that the real increase of 80% to households could potentially be lesser if not for this conversion to gas. But I jest, since it is really impossible for anyone to predict oil/gas price trends.

However, if you are a PeakOiler like me and believe that oil/gas prices will be going up some more in the future, I hope you can see (from the fact that oil is above $70 and gas, $6.21 in June 2006) that Singapore’s 95% dependence on fossil fuels for power generation is really not the way forward.