Boycott the Big Four (Petron, Shell, Chevron, Total)= Cheaper Local Oil Prices?

[badsekktor]

bakit di kasama ang caltex? hindi ba kasama sa big 4 ang caltex? hehehehe! dun pa naman ako lagi nagpapakarga. Just recently, meron bago sa min gas station, texas oil yata yun name. may biodiesel sila 56 per liter, di ko pa lang na-try, masubukan nga....

[jpdm]

It's that the same thing said about the oil price deregulation law? And now the same people are clamoring that the government should regulate the price of fuel again.

The implementation of the oil deregulation law has mixed results. In my opinion, I've observed the following.

Positive:

1. Opened up the oil market to many players;Broke the grip of the Big Three (100%)
(similar result happened after the deregulation of the telecom industry. It broke the grip of PLDT)

2. Consumers were given more choice.
3. Prices based on market forces and not pegged artificially through government subsidies.
4. More companies have the opportunity to operate in a very lucrative market.


Negative:

1. after more than a decade, the law only made a small dent (93% of the local oil market) is still controlled by the Big Three. Only 7 percent was captured by a hundred other small oil players.

2. The oil industry it seems behave like an oligopoly. All oil companies, raise and roll back their prices almost at the same time; impose the same amount of increase on their prices. There is a price leadership.

3. The government cannot intervene in the market. It can only encourage oil companies to be prudent.

4. Limited choices.

5. Consumers will be at the mercy of oil price fluctuations.

Oil regulation has positive and negative effects. In my opinion, these are the following:

Positive:

1. Government controlled. Utilities are crucial industries. They have an impact on national interests and security.

Energy is a precious commodity. National economies depend on it. A developmental state will not allow market forces (profit-oriented)to fully dictate it..

2. Regulated oil prices. Through subsidies, the public is assured that the government will help cushion the impact (i.e. transport, food, everything that depends on oil) of high oil prices.


Negative

1. As usual, it makes the market stagnant. Very few favored firms. Will encourage inefficiency because the government anyway subsidizes the industry.

2.Limited choices.

3. Artificial prices of oil

4. Loss and waste of precious government revenues. And burden to the taxpaying public.

Right now, Im still weighting the pros and cons. Although most of our Asian neighbors slashed their oil subsidies (Malaysia, Indonesia, India) they still have the subsidies.

On the other hand, I really hate oligopolies and natural/artificial monopolies. It limits the power of choice of consumers.

This will put the consumers at the disadvantage because they may not be able to affect the market (thus, will not get the equilibrium price-a price where both consumers and producers will maximize their benefits).

[empy]

The implementation of the oil deregulation law has mixed results. In my opinion, I've observed the following.

Positive:

1. Opened up the oil market to many players;Broke the grip of the Big Three (100%)
(similar result happened after the deregulation of the telecom industry. It broke the grip of PLDT)


Negative:

1. after more than a decade, the law only made a small dent (93% of the local oil market) is still controlled by the Big Three. Only 7 percent was captured by a hundred other small oil players.
.

sorry, but this is ridiculously contradictory :rofl01: unless you feel that ceding 7% of market share is somehow "breaking the grip" of the big 3...

also, you keep copy/pasting articles that are long on rhetoric and woefully short on facts. where's the proof that these oil companies are profiteering? how much profit are they making on each liter of gasoline? i am pretty weak at finding reliable interweb sources about philippine business or i would find these income statements myself...

[uls]

After reading ur last post, sir jpdm, u remind me of that Concepcion guy... ung sa Consumer Oil Price Watch...

After years of acting like an oil industry expert, what exactly ang nagawa ni Concepcion sa presyo ng fuel?

wala.

[BlueBimmer]

hahahahahaha

[niky]

The implementation of the oil deregulation law has mixed results. In my opinion, I've observed the following.

Positive:

1. Opened up the oil market to many players;Broke the grip of the Big Three (100%)
(similar result happened after the deregulation of the telecom industry. It broke the grip of PLDT)

2. Consumers were given more choice.
3. Prices based on market forces and not pegged artificially through government subsidies.
4. More companies have the opportunity to operate in a very lucrative market.


Negative:

1. after more than a decade, the law only made a small dent (93% of the local oil market) is still controlled by the Big Three. Only 7 percent was captured by a hundred other small oil players.

2. The oil industry it seems behave like an oligopoly. All oil companies, raise and roll back their prices almost at the same time; impose the same amount of increase on their prices. There is a price leadership.

3. The government cannot intervene in the market. It can only encourage oil companies to be prudent.

4. Limited choices.

5. Consumers will be at the mercy of oil price fluctuations.

Oil regulation has positive and negative effects. In my opinion, these are the following:

Positive:

1. Government controlled. Utilities are crucial industries. They have an impact on national interests and security.

Energy is a precious commodity. National economies depend on it. A developmental state will not allow market forces (profit-oriented)to fully dictate it..

2. Regulated oil prices. Through subsidies, the public is assured that the government will help cushion the impact (i.e. transport, food, everything that depends on oil) of high oil prices.


Negative

1. As usual, it makes the market stagnant. Very few favored firms. Will encourage inefficiency because the government anyway subsidizes the industry.

2.Limited choices.

3. Artificial prices of oil

4. Loss and waste of precious government revenues. And burden to the taxpaying public.

Right now, Im still weighting the pros and cons. Although most of our Asian neighbors slashed their oil subsidies (Malaysia, Indonesia, India) they still have the subsidies.

On the other hand, I really hate oligopolies and natural/artificial monopolies. It limits the power of choice of consumers.

This will put the consumers at the disadvantage because they may not be able to affect the market (thus, will not get the equilibrium price-a price where both consumers and producers will maximize their benefits).

Well... see... the Negative of "limited choices" simply shows that this isn't the kind of business that's easy to invest in. So "limited choices" cannot be a consequence of deregulation, just a side effect of the fact that breaking into the oil market is just as hard as putting up a brand new fast-food chain... look at all the "big players" who have tried to enter the Philippines and have been totally destroyed by the Jollibee-McDonalds monopoly... Carl's, Arby's, Burger King (barely holding on), Wendy's (on life support), KFC (comes and goes)...

Before you cry "off-topic"... note, I'm using this, again, as an example of the business market... which oil is, whether we like it or not.

The oligarchic nature of the oil business is a given. That's the nature of almost all businesses... except those that are monopolies. There is no such thing as a perfectly competitive business with a wide variety of prices... especially if you're selling a limited commodity like oil.

Prices are dictated by a number of things. Return-on-investment, market share, and operating/material costs.

The baseline for fuel prices are set by operational/material costs. Which are fluctuating. This is the reason for fuel price movement.

The mark-ups of most players are determined by ROI needs. Since you need to guarantee an ROI to your investors, you need to assure yourself a profit of at least 10%. What if the investor is the government, you ask? Then that's bad for the government... Government savings and loans institutions, for example, that are used to support dependents of armed forces employees, give out a return of 15%. (It used to be 20%)... so you can see that 10% really isn't that much.

Market-share: now here's where it gets interesting. Gas stations will artificially lower prices to compete if their market share is slipping. Investors won't like the loss of profit percentage... but the loss of gross profit is worse.

So they jockey for position. Where a lot of players sit close to each other, prices get lower due to competition. But guess what? This doesn't help any of them. The big players smart from the lesser return, but the smaller players suffer. Because they can't make as big a profit or return on investment as the big players, they can't expand enough to become a big player, themselves.

And that's what limits the number of players on the market. To entice more customers, small guys give low prices. Low prices equals small returns, a poor investment choice, and limited capital to expand.

Like I said... go ahead and fill up at small stations. Give them enough business, and they can probably expand. But if, after a year or two of getting a bigger market share, their stations don't look nicer and they don't make new stations... then you have the same conundrum... all your money is ending up in some businessman's pockets.

The only negative you can truly assign to deregulated oil:

5. Consumers will be at the mercy of oil price fluctuations.

Unfortunately, that's not a problem we have an easy answer for. And it's not as bad as the alternative:

1. As usual, it makes the market stagnant. Very few favored firms. Will encourage inefficiency because the government anyway subsidizes the industry.

Anything government-run or subsidized eventually ends up in decay. With no need to compete for market share, companies stagnate... give worse service, etcetera... again, remember what happened to our electrical utilities after Marcos sequestered them.

Look at the service (or lack thereof) of the PNCC in the south. That's a government-backed monopoly. And it sucks.

[mazdamazda]

This is frikkin hilarious.

You want us to boycott Shell and Petron when they are the only ones who have an oil refinery here?

So should Shell and Petron fold up, we'll be dependent on importing finished fuel products as well... regardless of how numerous those small and independent gas stations will be - they'll be getting their oil from one source.

Now don't tell me that the small petrol players will suddenly buy Shell and Petron's oil refinery (or even build one).

Another thing, why should I patronize a small gas station where whenever I fill-up, my car's idling goes berserk and my fuel consumption goes up?

Just check out the gas price of the Big Four and compare it to ASEAN gasoline prices (well except in Malaysia), the price is pretty close and ours is even cheaper.

Unless you have some hard data that the gasoline price here in the Philippines is way overpriced compared to our neighbors...

[jpdm]

sorry, but this is ridiculously contradictory :rofl01: unless you feel that ceding 7% of market share is somehow "breaking the grip" of the big 3...

I suggest you, read my previous posts, did I claimed that Im an industry expert? A big NO.

You know you should read my posts carefully. I didnt even made a conclusion regarding the two market regimes. I Just presented my OBSERVATIONS AND OPINIONS.

Now about Breaking the grip, are you not breaking the grip of the Big Three if you are going to gas up at the other gas stations of small players (about 100 small players)? Its obvious the share (oil market)of the BIg Four will be reduced if people (by thousands or millions) will reduced also their patronage of the gas stations of the BIG three.

Again, this is just one of the possibilities....

But did I make a conclusion about tthe two market regimes....a deregulated one and a regulated one? No. Again, I just stated by perspectives. Its up to you if you have a better idea.

you keep copy/pasting articles that are long on rhetoric and woefully short on facts. where's the proof that these oil companies are profiteering? how much profit are they making on each liter of gasoline?

My apologies, but who are you to question the validity of my sources (quoted articles) ?These people that I quoted (Gullas, Goilez, Arroyo etc.)based their pronouncements on their respective study. Now, I took their side and expressed my own opinion.

If you think they are wrong, and long of facts, prove it. Show you own research to prove them wrong.

At least, I posted the Basis of my OPINION.

How about you? Do you have your own study about these oil companies?Do you have proof that they are not profiteering? Before making a BIG Statement that my sources are mere rhetorics you should have your own proofs!

i am pretty weak at finding reliable interweb sources about philippine business or i would find these income statements myself..

Titirahin mo ako e wala ka namang pruweba, nangangapa ka pa. At least, I based my opinions on the pronouncements of these government officials who I think have reliable information about the oil industry and compel them to make those negative pronouncements against oil companies.

E ikaw?

[mazdamazda]

[jonski]