Energy as a hostage with people and planet paying the price
As the US-Israel-Iran conflict continues, those at the frontlines continue to be in a state of constant fear, with their basic human rights and livelihoods stripped away. The damage is not contained by borders, the impact of this conflict is felt far beyond the frontlines as our global economy is built upon a foundation of distant, import-dependent fossil fuels and commodities – including fertilizer and feeds. When critical supply chain pathways are severed by conflicts, a dangerous domino effect is triggered. Ordinary people did not choose this war. We were never given the option to reject. Yet most of us are in countries that lack energy, food and agricultural self-sufficiency and are forced to bear the full weight of the impacts.
In Southeast Asia, we face full-on the impacts of this war. The Philippines just declared a state of national energy emergency in an attempt to secure fossil oil and gas, aiming for some stability to the mega oil price hikes of almost 100% impacting daily lives. Farmers face doubling cost of fertilizer, fisher folks skip daily fishing to save on fuel or stretch their time at sea at great risks to optimize fuel supply. Jeepney drivers had to resort to a nationwide strike to get government action, as they are prevented from increasing transportation fares while bearing oil price hike. Daily wage earners face the threat of increasing food prices and families with migrant workers in Southwest Asia face the prospect of losing jobs or worse, a loved one. Overseas remittances buoy the Philippine economy, and current disruption poses a serious threat to the country’s GDP.
Thailand has a high reliance on imported energy, with its economy particularly vulnerable to oil and gas price shocks. Airline costs have increased discouraging tourism with an anticipated loss of THB150B not to mention 1,000 inbound flights cancelled or delayed. After weeks of using the Oil Fuel Fund, the government was forced to abandon the price cap as the fund began bleeding 2.5 billion Baht daily, resulting in an overnight fuel price increase of 6 baht per liter, or 14% to 22%. More than 1,000 Thai nationals have been repatriated. At least three Thai sailors remain missing when Iran targeted a Thai marine vessel off the Strait of Hormuz.
Malaysia and Indonesia, albeit as oil and gas producers, also face a potential significant impact of rising oil prices towards their national budget. Both countries subsidize their domestic oil and gas consumption which will put additional pressure against their national budget. One estimate warns that the Malaysian federal budget would bear a heavier subsidy for domestic oil consumption even though there will be a bigger profit gained by Petronas due to the higher oil prices. As for Indonesia, a national budget deficit is looming in the background, with a risk of USD 411 million budget deficit in every rising price of USD 1 per barrel in the Indonesian Crude Price (ICP). The Indonesian government will adopt one day working from home per week for government officials and encourage private sectors to follow suit to reduce oil consumption during the ongoing conflict in Southwest Asia. Furthermore, rising cost of other petrochemical products like fertilizer and plastics are being felt by farmers and small and medium enterprise owners.
Just transition to renewable energy a national and regional security measure
The impact of the Southwest Asia conflict shows how fossil fuels can be transformed into a geopolitical tool that directly impacts people’s lives. Even with the opening of the Strait of Hormuz, it will still take months for supply and therefore prices to stabilize. This is compounded by the looming super El Nino which will further put a stress on energy supply and demand, and food production. In addition, there is a possibility of US-Israel strikes on Iran shadow fleets that pass by Southeast Asia waters which in turn can affect lives and pollute the environment.
Southeast Asian countries must take this as an opportunity to fast track the shift to renewable energy. Pakistan’s people led renewable energy revolution is proving to be not just a climate commitment but a national security measure – strengthening the ability to secure the basic needs locally, reducing dependence on market fluctuations, wars and geopolitical tensions. The just transition towards renewable energy should be set as a regional and national policy goal with clear milestones for ASEAN Member States. The upcoming 2026 ASEAN Summit, should address the issues of fuel supplies and food prices with the lens of fast tracking the just transition towards renewable energy as a matter of national and regional security.
Renewable energy as a national and regional security measure requires a fundamental rethinking of the entire energy system structure. A more decentralised renewable energy production system, as seen in Pakistan, is needed to make energy more accessible to homes, health care units, schools, farms, and small businesses. Such a system builds resilient communities, who are likewise at the frontlines of the impacts of climate change.
A decentralized energy system builds the agency of the community to take control over their lives, livelihoods and their environment. It is a pathway out of being held hostage by fossil fuel wars.
