6 Things You Need To Know About The Economy Energy

What is The Economy Energy?

Most of us more likely strange with Economy Energy. What exactly Economy Energy is? Read article below!

#1 What is the Economy Energy?

Both you and I agree that energy is important to support our activities. From cooking, cleaning households, going to work, sending gas to customers, building roads, skyscrapers and new towns, all need energy.

So it would be hard to imagine how difficult it can be when there is a blackout. If you ever experienced a blackout in the middle of accomplishing your deadline, you wouldn’t like it very much, do you? 

Recently, energy demand has been surging because of industrial development and population growth. Especially for emerging economies that highly depend on energy to meet its economic interest. When the amount of energy isn’t enough to meet the demands, there’ll be scarcity in energy. 

Economy energy is the use of energy in an efficient way. The way of using less energy because you don’t have enough of it. 

In the 2000s, the price of world crude oil rose at least three times in 2003, 2005, and surged at an all-time high to $147.30 in 2008.

The factors that triggered this crisis were the geopolitical tension in the Middle East, the decline of the value of the U.S dollar, the higher demand from China, the decrease of oil reserves, and oil price speculation. 

The higher demand for world crude oil is predicted to increase by 37% by 2030. The sector that spends much of oil comes from transportation with cars and personal vehicles contribute most to the use of oil. 

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The world had experienced several oil crises in the past due to war, monopoly, and oil embargo used to gain political interest. 

Oil is already a scarce natural resource and its production is costly. It has a maximum limit of extraction. That means after reaching this limit, oil production will experience a long term decline that diminishes the supply of oil. 

Therefore, the economy energy, besides renewable energy, is perceived as a solution to the problem. 

#2 What Are The Impacts Of The Energy Crisis?

The energy crisis can have profound effects on social and economic activities. Here are some of them:

#Hindrance business investment 

As the oil price hikes up, it lags or slows down the progress of the business production and distribution sectors. It can lead to investment decline since the cost of production also goes up. 

#Causing food prices to increase

In 2007, the food price increased dramatically due to the high cost of fertilizer, transportation, and agriculture industry. This happened because oil prices went up. 

#Rolling blackout

It happens because the demand for electricity outweighed the supply. This happens in Gaza, where the electricity is only available for a few hours. It is the result of political tension between Hamas and the Palestinian authority. 

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#Social unrest

The surging of food prices in 2007-2008 led to social unrest in Asia and Africa. There were protests and riots because basic food was not available. In Indonesia, protests took place over the rise of food and gasoline prices in 2008. 

#Inflation rate rises

From 2005 to 2006 in the U.S the increase in oil prices caused the rise of the inflation rate to 3.3%. 

What other effects do you think can happen because of the energy crisis? 

#3 What Are the Solutions to The Energy Crisis?

Economy energy or efficiency energy is a strategy offered when the energy crisis happens. It is a way to use energy less in business production. The purpose is to diminish the cost of energy. 

Here are some benefit of implementing energy policy based on energy efficiency: 

#Saving money

For consumers, using less energy will allow them to reduce spending on energy and save money. 

#The decrease of consumption in energy

By using energy more efficiently, a government can reduce the consumption of energy. According to the International Energy Agency, the implementation of efficiency energy among its member states in 1974-2010 has successfully reduced the consumption of fuel, coal and natural gas. 

#Other benefits

Efficiency energy can reduce climate change impact and air pollution, improve health conditions, and energy security, as well as lower the risk of energy prices for consumers. 

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#4 Implementation of The Economy Energy

Now, let’s see some applications of economy energy or efficiency energy. 

#Using modern devices that save more power

Switching from old household tools to a new one is proven to save more electricity. Some of the tools are energy-efficient refrigerators, ovens, stoves, dishwashers, washing machines, and dryers, which spend less energy than the old ones. 

#Building

Because the building is one of the major consumers of energy, the building model that can spend less energy is created. An example of this is the Empire State Building in the U.S that gets a Gold rating from Leadership in Energy and Environmental Design (LEED). 

#Transportation with low-energy usage

Several ways can be applied to decrease the use of energy in cars such as using improved aerodynamics to minimize drag, reducing vehicle weight, and the use of more advanced tires.

An example of this is the diesel of Mercedes-Benz Bionic that can use 2.8 L gasoline/100 km, which is four times the use of conventional automotive. Another example is Toyota Prius, a full hybrid electric automobile produced by Toyota since 1997. 

#Switching city’s light street to LED lamp

LED lamps are able to reduce electricity consumption by 50% to 80%.

#The use of alternative fuels

Several alternative fuels had been discovered to reduce conventional ones. Some of them that commonly used are biodiesel, bio alcohol, electricity, hydrogen, non-fossil methane and non-fossil natural gas, vegetable oils and other biomass sources.

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#Solar energy as an alternative 

Solar is sunlight heat that is changed into power using technology. It can be used as an alternative to electricity. It is predicted to be the source of the world’s largest source of electricity in 2050. And it has been applied in transportation, agriculture, appliances, 

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#5 Indonesia Energy 

Let’s now take a look into the profile of Indonesia’s energy in general. 

#Indonesia energy production

Endowed with the richness of natural resources, Indonesia produces energy namely oil, coal, natural gas, and palm oil. It also has renewable energy highly potential to be an alternative to conventional energy such as solar, wind, hydro, and geothermal energy.

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Along with that, it is the fourth-largest coal exporter in the world and the biggest gas supplier in Southeast Asia. According to IEA (International Energy Agency), the government successfully decreased those without access to electricity from around 100 million in 2000 to around 23 million in 2016.

And people without access to electricity remain concentrated in East and Central Java, East Nusa Tenggara, and Papua (IEA data). 

Based on data from the Indonesia Ministry of Energy and Mineral Resources, Indonesia’s coal production increased significantly during the last 10 years. From 240,249,968 in 2008 to 557,772,940 ton in 2018. Contrary to oil, it decreased from 357,501 thousand bbl in 2008 to 281,826 thousand bbl in 2018.

While gas refinery production fluctuated from 2008 to 2018, it slightly declined from 1,831,683 tons in 2014 to 1,143,958 tom in 2018. Besides, natural gas production increased significantly from 2008 to 2010, but it went down from 3,256,379 mmsc in 2011 to 2,996,802 mmsc in 2018. 

#Indonesia energy consumption 

With its large population of around 250 million people, it can lead to higher energy consumption in Indonesia. 

Industrial sector 

From the industrial sector, the use of total fuel went down from 9,169,487 in 2008 to 5,581,320 kiloliter in 2018. Coal consumption of this sector experienced fluctuation. It increased from 2008 to 200 11 and continues to decline from 29,291 in 2012 to 23,930 thousand tons in 2018.

While the consumption of gas from this sector went up slightly from 623,616 in 2008 to 672,298 mmscf in 2018. The use of LPG slightly declined from 132 in 2008 to 110 thousand tons in 2018. But electricity consumption surged drastically from 47,969 in 2008 to 93,535 GWh in 2018.

Household sector

Energy consumption from the household sector of Indonesia in general increased significantly in gas, LPG, and electricity over the past 10 years.

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Consumption of gas increased from 729 in 2008 to 1,131 mmscf in 2018. The use of LPG surged from 1,582 in 2008 to 7,252 thousand tons in 2018. While electricity use hiked up from 50,184 in 2008 to 102,712 GWh in 2018. 

Commercial sector

Total energy consumption from the commercial sector also doubled over the past 10 years, from 28,219 in 2008 to 43,153 thousand BOE in 2018. The largest consumption was from the electricity sector that was 36,516 thousand BOE in 2018. 

Transportation sector

From the transportation sector, average energy consumption increased over the last 10 years. Total use of fuel in this sector rose from 30,822,987 in 2008 to 64,269,017 kiloliter in 2018.

While electricity consumption also increased from 81 in 2008 to 274 GWh in 2018. This sector’s largest consumption was Gasoline RON 90 or Pertamina Pertalite, gasoline use in cars and motorbikes.

It went up from 379,959 in 2015 to 17,706,790 kiloliter in 2018. It’s not surprising since many people, particularly in big cities, prefer to use private transportation for working and other activities rather than public transportation. 

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Other sectors

The largest energy consumption from other sectors came from Gasoline CN 48. It increased from 2,353,575 in 2008 to 4,034,503 kiloliter in 2015. But since 2016 it declined from 2,243,710 to 1,844,472 kiloliter in 2018. 

#6 Energy Diversification As A Strategy in Economy Energy

As you can see from the data, the number of energy consumption of Indonesia in general steadily rose over the last 10 years.

The factor that contributed to this event among them is population growth and development programs especially in infrastructure as Indonesia’s economy is shifting from agriculture to a more industrialized economy.  

Indonesia became a major player in global energy with its role as a global exporter of oil, gas, and coal, particularly in East and Southeast Asia region. With its economic growth around 5% to 6% annually, not only the demand from abroad but from domestic are increasing as well. 

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Although Indonesia is an exporter, it has already become an energy importer. From the data shown above, the production of oil and gas in Indonesia has declined over the last 10 years, contrary to coal that increased. 

Oil export in Indonesia fluctuated from 2008 to 2015 and decreased significantly from 125,516 in 2016 to 74,449 thousand bbl in 2018. While its imported oil increased from 2008 to 2016 from 97,006 to 148,361 thousand bbl and slightly declined to 113,055 in 2018.

Indonesia exported its oil to Japan, Korea, Taiwan, Singapore, and the USA.

The general amount had declined significantly since 2008 from 134,872 to 74,449 thousand bbl in 2018.

In the LPG sector, the export decreased drastically from 100,531 to 434 tons in 2018, while its import surged sharply from 415,000 to 5,566,572 tons in 2018. In the electricity sector, Malaysia is an electricity exporter for Indonesia. Its export to Indonesia rose from 1.26 GWh in 2009 to 1,495.89 GWh in 2018. 

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Given this condition, energy diversification is the strategy needed to solve the problem. The goal of this energy policy is to reduce consumption of conventional energy such as oil and increase the use of alternative energy namely renewable energy. 

#Indonesia energy production of renewable energy

Indonesia has high potential resources of renewable energy such as solar, wind, hydro, geothermal energy, and coal as well.

Though its natural gas production decreased slightly, it has diversified its energy use for power plants into hydro, solar, coal, gas, combined cycle, geothermal, diesel, gas engine, and wind. The largest power plant production came from coal followed by diesel, hydro, gas, and geothermal.  

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Power plant production from coal increased sharply from 41,311.31 in 2008 to 110,034.99 GWh in 2018. While power from diesel rose from 10,211.54 in 2008 to 21,862.00 in 2014, it declined from 18,858.61 in 2015 to 15,018.82 GWh in 2018.

Although hydro fluctuated, the production decreased from 2016 to 2018 from 13,885.79 to 10,728.68 GWh. From the gas sector, its power contribution surged sharply from 855.87 in 2008 to 3,846.21 GWh in 2018. While geothermal went up slightly from 3,390.66 in 2008 to 4,012.81 GWh in 2018.

Conclusion 

Although it is a way to reduce the consumption of oil, the energy economy is not applied mainly when there is a crisis. The main reason for efficiency in energy is because the energy itself is a scarce resource and the population and human civilization keep on growing.

Besides, the cost to supply the demand for energy can be even higher when economy energy is implemented. 

What remains a major challenge is how the government can meet energy security targets with sound policies. Energy reserves, energy conservation, as well as economy energy is one of them. 

The energy crisis, on the other hand, can impact the economy of a country and its people. It even can lead to an economic recession. That’s why, you need to allocate some of the assets into safe-haven assets such as cash, and gold to protect you from the crisis. 

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How do you manage your assets this year? Share your ideas in the comment below. 

Hopefully, this article can provide the information to help you make informed decisions related to your money management.

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References:

• Admin. Indonesia. Iea.org – https://bit.ly/39mN9k0