THE price of oil keeps falling. In June 2014, a barrel of Brent crude costs $110. By early 2015, it was down to $60. Today it is a mere $30. Pump prices of gasoline and diesel plunged. According to news reports, the retail prices of diesel in Metro Manila ranged from P20.55 to P23.95 per liter while for gasoline, from P33.20 to P40.65 per liter. The reason can only be a surplus in supply.
According to the International Energy Agency oil market report, Benchmark crudes approached seven-year lows in early December after OPEC opted to continue producing at will to defend market share. Global oil supply inched up 50 kb/d in November to 96.9 mb/d on slightly higher OPEC crude output.
Motorist are of course happy with the cheaper fuel. They can travel more for less. With his, expect more cars on the road. Gas guzzling SUV's will surely be back on the streets and vehicle sales will shoot up. I read a news report that in the United States, carmakers celebrated record auto sales. Americans bought 17.5 million cars and trucks in 2015 which is a huge turnaround from 2009.
There is a downside to cheap oil however. More cars mean more global warming carbon dioxide in the atmosphere and pollution in the air. It's good things that modern cars are more fuel efficient than old ones. It helps too that fuel standards are becoming stricter. In the Philippines, the Department of Environment and Natural Resources (DENR) has issued an Order requiring the use of cleaner fuel and imposing stricter emissions standards for all vehicles to be used or introduced in the market effective July 2015.
The new Euro 4 set of standards, instead of the current Euro 2 standards, will need to be complied with. Under the Euro 4 fuel, the sulfur content of diesel is already 50 ppm instead of 500 ppm for Euro 2 fuel. For gasoline, the sulfur content of Euro 4 is also 50 ppm instead of the 500 ppm for the Euro 2 fuel. Benzene in gasoline is 1% by volume compared to 5% for Euro 2 fuel. For aromatics, Euro 4 fuel contains only 35% by volume compared to Euro 2 fuel, which prescribes no limit.
Enjoy the cheap gas while it lasts, but please be mindful of the environment.
Meanwhile, giant automaker Volkswagen is struggling to recover from its emissions scandal. It will be recalled that in September, the U.S. Environmental Protection Agency (EPA) discovered that certain models of Volkswagen cars contained "defeat device" software able to detect when the vehicle is being tested for emissions. The device engages environmentally friendly settings during the test, improving emissions results. But on the road, the device can turn off these settings to improve drive performance.
The U.S. Department of Justice, on behalf of the U.S. Environmental Protection Agency, recently filed a civil complaint in federal court in Detroit, Michigan against Volkswagen. The complaint alleges that nearly 600,000 diesel engine vehicles had illegal defeat devices installed that impair their emission control systems and cause emissions to exceed EPA's standards, resulting in harmful air pollution.
In the Philippines we have emission testing centers that cheat on their test results. It is unthinkable that in rich countries, the automakers themselves are the ones accused of cheating. Again, the environment is the loser.
Rox Peña (Thursday, January 14, 2016). Pena: Cheaper oil. SunStar Pampanga. Retrieved from http://www.sunstar.com.ph/pampanga/local-news/2016/01/14/pena-cheaper-oil-451773