SINGAPORE: For anyone who followed Parliament’s proceedings on Tuesday (April 7), news that the United States and Iran have reached a two-week truce would have been cold comfort.
Setting aside whether vows to reopen the Strait of Hormuz will be taken at face value, damage to the gulf’s oil refineries and LNG facilities mean energy supplies will stay constrained for months to come.
Singapore’s leaders took pains on April 7 to point out that electricity prices will sharply increase at the next adjustment, given that only a small portion of the recent surge in fuel prices was captured in the tariff for April to June.
Food costs are also likely to rise in the coming months, given that the Strait’s closure has choked off a third of the world’s fertiliser trade and spiked freight costs.
The clear message from the three ministerial statements delivered is that Singaporeans should brace themselves for higher food and electricity costs, even as the Republic seeks to maintain a sense of normalcy amid external convulsions.
But as Singaporeans tighten their belts, they should know that the city-state will “never waste a good crisis” – an adage that Senior Minister of State for Sustainability and the Environment Zaqy Mohamad reprised in the House.
The two energy crises in the 1970s were instructive. Singapore learnt some hard lessons following the 1973 Arab oil embargo, which caused the price of oil to quadruple to US$12 per barrel, and in 1979 when oil prices more than doubled to US$39 following the Iranian Revolution.
Both crises led to global stagflation, where countries were put in the invidious position of both high inflation and low economic growth. In Singapore, GDP growth tanked from 11 per cent in 1973 to 7 per cent in 1974, and to 4 per cent in 1975.
Singapore’s decision within days of the 1973 crisis to assure the oil majors here that the city-state would lay no claim over their oil stocks – and instead share in any cuts they imposed on their other customers – burnished its reputation and led to additional investments, both in refinery capacity and downstream petrochemical products.
Higher oil prices also saw new suppliers emerge, and the city-state saw an opportunity amid the tough times to plug into the nascent oil trading network that matched producers and consumers.
Today, Singapore remains the largest bunkering hub in the world. It is also the world’s third-largest oil trading hub and sixth-largest refinery export hub, as Coordinating Minister for National Security K. Shanmugam noted.
These facts are why Singapore relies on the Middle East for more than half its total crude oil imports, but has so far not had to implement fuel rationing measures: Countries that supply Singapore with crude oil in turn depend on the Republic for refined products they need, noted the minister.
Even so, elevated pump prices here have driven home the degree to which Singapore’s energy security depends on factors outside its control. As Shanmugam put it, while the country is committed to decarbonising, for now the clear priority worldwide is keeping the lights on.
As the Republic presses on with energy diversification, solar panel deployment will continue, as will efforts to import renewable and low-carbon electricity from the region.
With rising electricity prices on people’s minds, Shanmugam made clear that Singapore will study nuclear energy rigorously, though adoption will require very serious consideration.
In Parliament, he painted a vivid picture of the difference in energy density: five one-inch tall uranium pallets would be able to generate as much electricity as an Olympic-sized swimming pool of natural gas.
While Singapore will never put its population at risk by being a first-mover to adopt advanced nuclear technology such as small modular reactors, the Republic “can be a fast adopter”, said Minister-in-charge of Energy and Science and Technology Tan See Leng, hinting at the kind of drawer plans the Government is sketching.
With food, the crisis also presents an opportunity. While Singapore’s food resilience strategy took a hit in recent years due to rising energy costs, more expensive imported food could prompt Singaporeans to rethink the necessity of home-grown options.
Zaqy said that besides keeping up diversification, partnerships and stockpiling efforts, the Government intends to support local farmers to weather this crisis and gain market share.
While the Government’s instinct has demonstrably been to find opportunities in adversity, public appetite also factors into what is politically feasible.
For instance, one silver lining from the Covid-19 pandemic was the spotlight it shone on foreign worker dormitories and the strong public support to raise standards, then Manpower Minister Josephine Teo told this reporter in a 2020 interview.
This in turn energised the Manpower Ministry to set up a new division tasked specifically to support migrant workers and dormitory operations, and to forestall massive outbreaks should there be another pandemic.
While the public has since turned its attention to other issues, the results of those policy changes will play out for years to come. New dormitory standards were announced in 2021, and the following year, the Government said all dorms with seven beds or more would come under one regulatory and enforcement law.
A scheme to defray retrofit costs for existing dorms to enhance their liveability was introduced in 2023, with all existing licensed dorms to meet improved interim standards in 2030. By 2040, all worker dormitories must meet the new standards, which include no less than 4.2 sq m of living space per resident, up from the current 3.5 sq m.
As with earlier crises, Singapore’s response will be defined less by the shock itself, but by past and current lessons on finding one’s niche in a changing world.
How it restructures its energy mix and strengthens its food supply chains, for instance, will have ramifications long after this conflict is over. - The Straits Times/ANN
