Energy is a vital factor which determines the well-being of a society. This is so because the use of energy such as electricity, along with appropriate devices, for example, electric washing machines, permits a person to be many times more productive than when he does not use such energy. Consequently, it is generally presumed that, everything else being the same, the wealth of a society correlates positively with its per capita energy consumption, the higher the consumption the wealthier the society.

Owing to the critical role that energy plays in a country's economy, it is necessary to have a steady, reliable, and reasonably priced energy supply. Any disruption in supply or sharp increase in energy prices causes serious economic dislocations with attendant sufferings of the people, as experiences during the 1970s and early 1980s have shown. For this reason many governments have evolved energy policies designed to protect their societies against the ills engendered by disruption in energy supply or by unpredictable price spirals. Such policies include the management of energy demand, supply, and prices.

When a sharp increase in energy prices occurs, massive wealth transfer takes place, aggravating the country's balance of payment problem and poverty, particularly in a developing country such as the Philippines.

This chapter sketches the energy supply and demand situation in the Philippines during the 1970-88 period with the objective of identifying important problem areas along with the policies that evolved. In particular the problems implied by the aspiration of national leadership to transform the country into a newly industrializing economy (NIE) by the year 2000 are also examined.

ENERGY DEMAND

Under this heading are presented the aggregate energy consumption in the Philippines during the study period, the energy forms that comprised such aggregate, as well as the sectoral or industry source. The breakdown of consumption by economic sector and industry is also addressed. The interaction between energy consumption and the economy is also presented, together with conservation.