Singapore’s industries well insulated against oil price changes

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According to Channelnewsasia:

SINGAPORE: Oil prices have remained high in recent weeks, keeping near US$70 a barrel.

While this is keeping some analysts on their toes, some said Singapore is able to weather the high prices.

The comment came at the sidelines of the ASEAN Energy Business Forum 2007, which opened on Wednesday.

The issue of energy security is increasingly gaining prominence at many regional and international forums.

And most countries now agree that sustaining this involves a broad agenda that includes diversification, energy efficiency and bilateral cooperation.

In Singapore, basic market forces have already made an impact in encouraging the use of oil alternatives.

Khoo Chin Hean, chief executive of Energy Market Authority, said: “We were powered by oil. But over the last five to six years, we’ve made the switch to gas. The market will drive us to something that is cost efficient. By using gas, I notice it has helped to maintain downward pressure on electricity price.“

David Ernsberger, Asia editorial director of Platts, said: “Industries that consume oil have largely moved out of Singapore or they’re rationalising their businesses in some other way. Singapore is a service-based and a knowledge-based economy these days. So Singapore is very well insulated against this volatility in oil prices by not having these energy-intensive parts of the economy.”

As for industries that are dependent on oil, such as airlines and shipping, analysts said the increased costs have been mitigated by buoyant growth.

Mr Ernsberger said: “For the Singapore economy, it’s almost like oil prices don’t even exist because the GDP growth in this country has been far ahead of expectations. And I think the higher oil prices grow, the faster the Singapore economy grows.

“In fact, not only will the economy not slow down, it will probably continue to grow quite quickly throughout this period of high oil prices.“

With demand and supply fundamentals in oil holding strong, most market-watchers are expecting oil prices to stay near current highs.



Seriously, this article is forgetting about the future of Natural Gas pricing, yes we do have 22 years “long” term contract with Indonesia to import PNG (Piped Natural Gas) at a ridiculously low pricing compared to LNG. If Indonesia wants to play the ball like Russia vs Ukraine to hike the price of the NATURAL GAS or else will terminate the supply regardless of any contracts signed previously…Russian can have the option to sell it to other countries that are more willing to pay much more market price for LNG, such countries such as CHINA, INDIA, USA, KOREA and JAPAN…and many more. The future of Natural Gas will be even more expensive when Oil starts to be too expensive to afford.

So Ladies and Gentlemen…be prepared for the electricity hike…coming 2009 to 2010. Don’t say I never warn you, the liberalization of electricity market is coming to be country wide soon!

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