Oil Deregulation: Success or Failure?

[nicolodeon]

May I know why sir?

Why? Simple: this thread has a huge tendency to go around in circles just like your boycott thread and just like all the other oil-related threads here, this thread is turning out to be an extension of news feeds that a lot of people have access to - and probably read.

I'll let this thread slide for now. Watching this thread carefully.

[uls]

The difference between big player and small player:

Amount of capital for investment

Petron ups capital spending
http://www.tradingmarkets.com/.site/...0News/1800649/

Aug 04, 2008 (The Manila Times - McClatchy-Tribune News Service via COMTEX) Aug. 4 - PETRON Corp. plans to increase its capital outlay for its refinery expansion program because of increasing raw material and construction costs.

Nicasio Alcantara, Petron chairman and president, said the completion of the oil refiner's $1.5-billion Master Refinery Plan may need an additional $300 million because of rising costs.

Of the company's original programmed amount, $300 million has already been used to put up its new petrochemical facilities in its Bataan refinery.

The said facilities, which were completed early this year, are the Petro Fluidized Catalytic Cracker (PetroFCC) and Propylene Recovery Unit (PRU) and form part of the first phase of a program that aims to diversify the company's operations into petrochemicals.

[Monseratto]

oh boy...here we go again...

:pepsi: :popcorn:

[creepy]

IBON!! IBON!! IBON!!

(... I'm waiting for someone to quote this highly-respected (haha) outfit...)

[Monseratto]

Why? Simple: this thread has a huge tendency to go around in circles just like your boycott thread and just like all the other oil-related threads here, this thread is turning out to be an extension of news feeds that a lot of people have access to - and probably read.

I'll let this thread slide for now. Watching this thread carefully.

Sir, mukhang tinakot niyo yung bata. Hinde natuloy yung circus...

[jpdm]

Why? Simple: this thread has a huge tendency to go around in circles just like your boycott thread and just like all the other oil-related threads here, this thread is turning out to be an extension of news feeds that a lot of people have access to - and probably read.

I'll let this thread slide for now. Watching this thread carefully.

Pardon me, I disagree.

Malaki pagkakaiba nito sa boycott sir.

This is a legitimate issue. Its up to the posters. I just hope some people here should stop flame baiting.

[jpdm]

IBON!! IBON!! IBON!!

(... I'm waiting for someone to quote this highly-respected (haha) outfit...)

Sir, mukhang tinakot niyo yung bata. Hinde natuloy yung circus...

What are these? Flame-baiting?

I just dont understand why are you doing this.

I suggest, If you hate the thread, just please ignore it sirs.

[jpdm]

Philippine Star
More oil price cuts coming
By Jess Diaz
Wednesday, August 13, 2008
Oil companies are expected to further cut the prices of gasoline, diesel, and other petroleum products in the coming weeks.
“If the cost of crude in the world market does not go up or if it goes down, expect more fuel price rollbacks in the coming days,” Fernando Martinez, head of the association of small oil industry players, told lawmakers yesterday.


“We will take the initiative to cut pump prices because we believe that if the cost of fuel is low, that stimulates demand, which in turn means good business for us,” he said.


[SIZE=3]Oil companies cut fuel prices last week on the initiative of small oil players.[/SIZE]


Martinez attended the House ways and means committee hearing on proposals to scrap or reduce the 12-percent value-added tax on oil products or shift to specific or fixed tax.


He said oil firms would not be affected by a shift in the taxation system since they just collect the levy and remit it to the government.
However, he said the proposed specific taxation for oil could be simpler to administer than the present VAT.


In the same hearing, businessman Raul Concepcion, who heads a non-government organization monitoring developments in the oil and power sectors, said he expects crude prices in the world market to stabilize or even further decrease.


“The coming November presidential elections in the United States will be a big factor. The Bush administration will do everything it can to keep prices down because high prices will not be good for administration candidates,” he said.


He said American officials could even use strategic US oil reserves just to keep prices from going up.


He added that the determination of the Americans to limit their fuel consumption could drive prices further down.


Crude prices, which have peaked at $145 per barrel and were previously expected to hit as high as $200, started going down when the market noticed a drop in US consumption.



Prices are now fluctuating between $118 and $120.

A sign that deregulation works?

[jpdm]

Business Mirror
August 13, 2008
by Paul A. Isla
UNioil, Oilink Charge

The Department of Energy (DOE) said the drivers of the petroleum companies’ vehicles were not able to present proper documents, such as valid delivery receipts, certificates of conveyance and calibration certificates for the transport of petroleum products.
Of the seven trucks, six oil tankers were found to contain roughly 116,000 liters of unleaded gasoline, while one oil tanker contained 20,000 liters of kerosene. The DOE said the combined value of the contraband was estimated at P5.5 million.
The DOE said Oilink Corp. allegedly was a subject of a hold order issued by the Customs commissioner. According to the order, Oilink’s depots, storage tanks and valves were ordered sealed pursuant to Section 1508 of the Tariff and Customs Code; that the hold order was in relation to Oilink’s tax deficiencies and penalties of a fuel import amounting to P353.5 million.
A source, who requested anonymity, explained that Unioil could not comment much on the issue since it may be cited for contempt as the court has yet to issue a final resolution on the issue.
However, Chito Medina-Cue, Unioil general manager, said his company has paid all taxes and has not been engaged in any illegal activity.
“We lost about 25,000 liters and P1.5 million during impounding,” Medina-Cue said.
The task force is mandated by Executive Order 655 to act with resolve and urgency to ensure the security and protection of energy and power-related facilities and associated infrastructure, and the enforcement of energy and related laws and standards.

Hmmm...it seems these companies are engage in unfair competition...

if this is proven true, its not good for the whole deregulated downstream oil industry per se....

[jpdm]

The Sunday Times
Manila TImes
August 10, 2008

Editorial

[SIZE=3]A Rogue Industry[/SIZE]

THE Department of Energy this week served notice to the Philippine unit of Royal Dutch Shell that it has yet to comply with a local law requiring oil companies to share their windfall with the public through the sale of stocks.

The energy department’s reminder is long overdue as the Downstream Oil Industry Deregulation Act of 1998 requires companies to sell at least 10 percent of their common stock and list them at the Philippine Stock Exchange within three years from the law’s coing into force.


[SIZE=3]It is now 2008 or a decade since it took effect, and yet not a single oil company has complied with Section 22 of the law.[/SIZE] Only one such company, Petron, had opened its ownership to the public, but this was on account of the government’s policy of shedding its interests in for-profit state-owned firms back in 1994, or long before the Downstream Deregulation law took effect.


Oil majors such as Shell and Chevron (formerly Caltex) have been pushing for an extension of the listing requirement, citing the weakness of the local stock market. But until early this year, the local bourse had enjoyed a bull run for two years running.


So this begs the question of how strong should the domestic market be to merit listing by oil companies. Their refusal to comply with the law obviously says a lot about how the Downstream Deregulation Act has emasculated the government and ultimately, the consumers.


The point of requiring oil companies to open themselves to public ownership is to compensate for the state’s loss of control over the industry after the law removed the government’s ability to set price ceilings. Having the second without the first is tantamount to the oil firms having their cake and eating it too.


[SIZE=3]With ownership in private hands, oil companies may do as they please under the present deregulated environment. In short, they are accountable to no one, and in a situation of skyrocketing oil prices, they may gouge the public.[/SIZE]


The Philippines’ deregulation policy was inspired by the experience of developed countries, where government stepped back from business to remove all sorts of inefficiencies that a regulated setup generated. But capital markets were more or less efficient in those developed countries such that the investing public can “punish” rogue corporations. In their home countries, Shell, Chevron and Total are publicly-owned, thus the absence of price regulation is made up for by the investing public’s vigilance.


[SIZE=3]Unfortunately, the Philippine government’s failure to enforce the Downstream Deregulation Act’s provision on initial public offering and eventual listing at the local bourse has created an environment that encourages rogue behavior on the part of oil industry players[/SIZE]. This partly explains why Flying V last month broke ranks and announced a price rollback.


True, this move benefited the public as it caught Flying V’s industry peers by surprise, thus forcing them to implement similar price cuts. But any gain from this by the consuming public is short-lived, as nothing will prevent oil companies from jacking up their prices soon after. Whereas the previous regulated regime assured stable and orderly price adjustments, the current deregulated environment only guaranteed chaos, especially at a time of record volatility in world market fuel prices.


We do not subscribe to a return to the regulated policy of more than a decade ago. But the Downstream Deregulation Act should be allowed to run its full course by compelling oil companies to open ownership to the public. Otherwise, the present “state of nature” in the oil industry would run roughshod over the public welfare.

Hmmmm.......