On agriculture, fossil fuels, and modernization

A peace deal between the US and Iran was announced yesterday and the official signing will be on Friday, June 19.

Crude oil prices have declined: WTI oil went from $90.5/barrel on June 5, to $85 on June 12, and $80 at noon on June 15. This is good. We need more cheap energy and not more war in order to modernize our countries.

Meanwhile, the rice planting season started in many provinces this month and the farmers face higher farming costs — because of the high oil and gas prices since the US and Israel started their war against Iran on Feb. 28.

Rental for the use of a rotor tractor in a rice field in Pangasinan was P2,800/hectare until about 2023. Then it rose to P3,200 in 2024-2025. Today it costs P4,000/hectare. I learned that tractor rental for sugarcane fields in Negros is now P6,000/hectare.

Various types of fertilizers are byproducts of oil and gas refining and petrochem production. I checked the prices of local fertilizers from the Fertilizers and Pesticides Authority (FPA) of the Department of Agriculture. The price of urea granular is up, from P1,656/bag at end-2025 to P2,666 on June 5, their latest data. My farmer source in Pangasinan said it was already P3,200/bag last week.

Ammonium sulfate (Ammosul) is up from P819/bag at the end of 2025, to P1,249 on June 5 — but my farmer source said it was actually already around P1,800 last week. Ammosul is a fast-acting fertilizer that provides a quick nitrogen boost. Complete fertilizer or triple 14 was P1,941/bag on June 5 as per FPA data, my source said it was already P2,200 last week.

I have looked at the global prices of selected fertilizers or their main ingredients. Sulfur has seen the largest increase, its price has nearly tripled from its end-2025 level. Sulfuric acid is used to produce phosphate, nitrogen, and potassium fertilizers like ammosul.

Fertilizers need good packaging for transport and moisture protection. Polypropelene (PP) woven sacks are used because fertilizers are corrosive and sensitive to moisture. PP bags are durable, cost-effective, and protect the product from absorbing atmospheric moisture and during shipping and handling. PP prices have increased too (see Table 1).

Last week, on June 9, the Bangko Sentral ng Pilipinas (BSP) made public a digital book they published last March, Current Account Dynamics and the Philippine Economy: Developments and Prospects. It is 402 pages long. It analyzed, among others, the country’s sustained trade deficit (merchandise imports are larger than exports) due to our poor manufacturing capacity. They are correct.

What the BSP is lacking in its analysis is the role of abundant energy — the greater use of oil, gas, and coal to produce more stable, reliable, and competitively priced electricity, and greater availability of liquid fuel for our trucks, buses, tractors, harvesters, etc. Maybe this is because the BSP has embraced the climate crisis narrative.  I checked the World Trade Organization (WTO) database and the Energy Institute’s database and found that between 2005 to 2025, countries that saw an expansion of their merchandise exports by 4.5 times or more — Vietnam, the UAE, India, and China — also expanded their energy supply by 2.2 times or more between 2005-2024.

Countries whose merchandise exports expansion was low, at most a 2.4-time expansion over two decades — Germany, the Netherlands, France, Italy, and the UK — also had declining or contracting energy supply. Germany, for example, went from 14.1 exajoules (EJ) in 2005 to only 10.1 EJ in 2024.

The Philippines suffers from energy poverty and will not be attractive to big manufacturers even if we had lower taxes and more efficient business bureaucracies (see Table 2).

Back to the Middle East war and the peace deal. The main lessons seen there are the following:

1. Negotiation, not prolonged bombing and endless war, is the key.

2. The US’ security guarantee for Middle East countries is not really working.

3. There is no substitute for oil and gas when it comes to expanding food production via more fertilizers and other agricultural inputs. Alternative power sources — solar, wind, biomass, geothermal, hydro, and nuclear — cannot produce ammonia, sulfur, phosphorous, potassium, other fertilizer ingredients, and packaging materials.

4. The Philippines and the rest of the world should again embrace hydrocarbons and fossil fuels. They should junk climate alarmism. Renewable energy is mainly for electricity production but not for food production.

Bienvenido S. Oplas, Jr. is the president of Bienvenido S. Oplas, Jr. Research Consultancy Services, and Minimal Government Thinkers. He is an international fellow of the Tholos Foundation.

minimalgovernment@gmail.com