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Business Times - 21 Nov 2006 SINGAPORE Q3 ECONOMIC SURVEY Economy not highly vulnerable to rising oil prices Studies that show S'pore has high energy intensity not accurate: MTI By RONNIE LIM SINGAPORE) The Singapore economy is not especially vulnerable to high oil prices, according to an official with the Ministry of Trade and Industry (MTI). In fact, Singapore's energy intensity - a measure that links the impact of rising energy prices on the economy - is not that high, he says. In a paper released yesterday with MTI's Q3 economic survey, Phua Kok Keong, senior assistant director of MTI's energy planning division, says some studies that show Singapore has a high energy intensity do not present an accurate picture. His report comes as oil prices remain volatile. They tumbled to a year-low of around US$55 last week from a high of US$78.40 in July, but rebounded yesterday to above US$58. Energy-intensity is the amount of energy consumed by a country for a given amount of GDP. But the figures can be skewed by the nature of an economy. For instance, a country with a strong concentration of heavy industries like oil refineries will be more energy-intensive than a service-oriented one. Singapore ranks high, at 480 tons of oil equivalent per million US$ GDP, according to the United States Energy Information Administration (EIA). But Mr Phua says data from the OECD-linked International Energy Agency (IEA), showing Singapore's energy intensity at 230 tons, 'paints a more accurate picture, as IEA stripped away marine bunkers from its calculation of energy consumption'. He says EIA and British Petroleum's Statistical Review of World Energy, which showed Singapore's energy intensity at 409 tons, over estimate Singapore's energy intensity because they count marine bunkers as energy consumed here. This distorts the picture because Singapore is the world's biggest bunkering port, supplying about 25.5 million tonnes of fuel oil to international shipping last year. According to IEA, Singapore's energy intensity is 40-50 per cent lower than the estimates by EIA and BP, and lower that of developed countries and NIEs like Australia, Taiwan and Canada. Mr Phua says another factor that contributes significantly to the calculation of energy intensity is the sale of jet fuel to international airlines, which IEA treats as part of a country's energy consumption. Also, compared with countries with low energy-intensive industries, Singapore's higher energy-intensity stems largely from 'the extensive use of heat and electricity in manufacturing processes, especially in the petroleum refining, petrochemicals and semiconductors industries,' he says. 'In addition, the petrochemicals industry consumes petroleum products as feedstock for their processes, which alone is estimated to contribute to about 20 per cent of our energy use. Taken together, the manufacturing sector accounts for more than half of Singapore's total energy consumption.' According to Mr Phua, it is, therefore, not surprising that Hong Kong - where manufacturing accounts for only 4 per cent of the economy - is one of the least energy-intensive economies by EIA's reckoning, compared with Singapore, where manufacturing's share of GDP is 24 per cent. Mr Phua says that after plotting energy intensity against per capita GDP for developed countries and newly industrialising economies, 'Singapore's energy intensity is roughly on par with our level of economic development'. Besides, he points out, certain sectors here - like refineries, rig-building and oil trading - have benefited from high oil prices. Copyright © 2005 Singapore Press Holdings Ltd. All rights reserved. |