VI - The Energy Economy of a City State, Singapore

Summary

The energy economy of Singapore is unique. The country possesses no conventional energy resources and its primary energy needs are met entirely by imports, almost exclusively petroleum-based. Yet, Singapore has deservedly been called the “Houston of Asia” as its petroleum industry has placed the nation at the heart of the Pacific Basin's energy markets (Fesharaki 1984, 1986; Doshi 1989a). Singapore ranks as the world's largest fuel oil bunkering centre. Its refineries collectively constitute the world's third largest refining centre, and its spot market is the focal point of oil trade in the Asian-Pacific time zone. In February 1989, the Singapore International Monetary Exchange (SIMEX) launched a High Sulphur Fuel Oil contract, the first petroleum futures instrument east of Suez.

The first section of this chapter attempts an interpretative look at economic growth and structural change in Singapore with a view to setting the wider context of the country's distinctive energy economy. Section two, directed towards the domestic aspects of the energy economy, summarizes salient attributes of the growth and configuration of domestic energy demand. The third section surveys the Singapore petroleum industry which provides a wide range of petroleum-related products and services largely for export markets. The impact of the oil price shifts on the Singapore economy is examined in the fourth section. The fifth section provides a discussion of energy policy in Singapore. The chapter concludes with some remarks on the linkages between public policy, economic development, and the energy sector.

ECONOMIC GROWTH AND STRUCTURAL CHANGE

Classified by the World Bank as a high-income developing economy with a GNP per capita of US$7,940 in 1987 (IBRD 1989), Singapore's standard of living (as measured by this basic indicator) is next only to Japan's in all of Asia. Since the late 1960s, Singapore has on the average achieved one of the world's best overall economic performance. It boasts one of the highest average growth rates among all countries of the world.