Oil Price Watch

[anonemus]

From the link:

As the battle for Libya intensifies, oil production in the country has plummeted. In the rebel-held east it's down by as much as 90 percent.

Now OPEC is considering boosting output for the first time in two years.

Al Jazeera's Alan Fisher reports.

[ame="http://www.youtube.com/watch?v=Q2-3ERwBiWI"]YouTube - Trouble for Libya's oil industry[/ame]

[CVT]

P2.50/L(?) na ang itinaas ng gasolina/diesel since a few days ago.... Hindi ka na rin makagpa-full tank to avail of the lower prices. Kung kailan na lang siguro kailangan... Ganuon din naman kasi... Tataas pa ulit.... Why sweat on it?

12.5K:soccer:

[uls]

Usually naman kasi with volume business there's big discount. And having their own refineries here in Pinas, they can stock more at a longer period to hedge against price fluctuations....

so based on that, Petron and Shell are the ones who should have lower retail prices coz they have volume discount, refineries, and larger storage capacity

and small players can't lower their prices as much as the big players coz they don't have volume discount, no refineries, and smaller storage facilities

The Oil Deregulation Law passed in 1998 was supposed to introduce free market play against the Big 3 with the entry of small players. But 10 years later, pare pareha lang presyo ng mga ito. The biggest price difference being P1/liter on the average, tama ba?

so based on the above points, the role of small players isnt to give big players competition (lower prices)

the role of small players is only to keep the big players in check. to keep big players from overcharging

the presence of small players prevents big players from setting their prices too high

so oil deregulation is actually working

--

big players can afford to lower their prices below small players' prices but they don't. why not? coz they don't have to.

small players aren't a threat to their business. if small players are a threat, they could easily lower their prices below small players prices and drive the small players out of business

this all goes back to my original point -- the big players don't have to lower their prices even if they can afford to. they have branding. their customers are loyal. their customers arent gonna defect to the small players unless the price difference is really big

Doesn't make sense. Giants and dwarves in the oil market selling at the same price? Ibig sabihin same cost (purchase price, transport, logistics, refineries, marketing, advertisement, overhead, etc).

maybe the small players' cost is lower coz they just import. they don't operate refineries

maybe the big players' cost is lower coz they have economies of scale

i don't know

but one thing i'm sure of -- the big players' margins are higher

Or baka may sabwatan lang talaga yung Big 3 and small players dito sa Pinas?

maybe that's what you want to believe

[Monseratto]

Nagtaas pala kahapon...P45 na ata diesel.


http://newsinfo.inquirer.net/inquire...-P54-per-liter

Unleaded gas shoots past P54 per liter
By Amy R. Remo, Kristine L. Alave, Norman Bordadora
Philippine Daily Inquirer
First Posted 04:05:00 03/09/2011


MANILA, Philippines—For the third time in eight days, fuel prices went up on Tuesday morning as fighting in Libya escalated and unrest in the Middle East persisted.

Oil firms raised prices of regular unleaded gasoline and diesel by P1.50 a liter and of kerosene by P1.25 a liter.

Unleaded gasoline is now retailed at more than P54 a liter and diesel at P45.55 a liter in Metro Manila.

Since the beginning of the year, oil firms have implemented eight rounds of price increases, resulting in a total increase of P6.75 a liter for gasoline and P6.50 for diesel.

This week’s price movements were again due to an increase in the prices based on the Mean of Platts Singapore (MOPS) benchmark for refined petroleum products.

MOPS-based gasoline prices rose to $120.74 a barrel last week from the previous week’s level of $116.8 a barrel, diesel prices increased to $129.50 a barrel from a week-ago level of $123.42, Energy Secretary Jose Rene D. Almendras said.

Based on the formula being followed by oil firms, a $3-per-barrel increase is equivalent to a P1-per-liter hike in the price of a petroleum product.

Potential food crisis

Days after forming a committee to ensure the country’s continuous fuel supply, Malacañang on Tuesday announced that President Benigno Aquino III would meet next week with officials to tackle a potential food crisis.

Presidential spokesperson Edwin Lacierda made the announcement after Sen. Edgardo Angara warned of a food crisis caused by the conflict in Libya and the unrest in the Middle East.

“For the moment, there is no crisis,” Lacierda said at a news briefing.

“However, the President will be meeting with (Agriculture) Secretary (Proceso) Alcala, (National Food Authority Administrator) Lito Banayo and (Budget Secretary Florencio) Abad next week after his arrival to discuss the food situation and rice supply,” he added.

Lacierda said the three officials were expected to raise the concerns of some senators over food supply when they meet the President next week after his state visits to Indonesia and Singapore.

He said the National Food Authority had already briefed Mr. Aquino on the country’s rice supply. The NFA on Monday said it would import 860,000 metric tons of rice for 2011.

World food prices

Consumers around the world are facing not only rising fuel prices but also surging food costs.

Prices of major grains were up by at least 70 percent from February 2010, according to the UN Food and Agricultural Organization (FAO).

Food prices have risen to record highs due to increasing demand, high oil prices and poor production yield, the FAO said.

The FAO price index averaged 236 points in February 2011, up 2.2 percent from January and the highest (in both real and nominal terms) since January 1990, when the United Nations started the measurement.

The index, which has been registering new highs for the past eight months, breached the 213.5 points recorded in June 2008 at the height of the food crisis.

Prices of major staples such as grains, rice, wheat and maize have been rising since last year, the FAO said.

The FAO Cereal Price Index averaged 254 points in February, up 3.7 percent from January and the highest since July 2008.

Of all the commodities monitored—dairy, oils and fats, meat, and sugar—only the sugar sector saw a slight decrease. The rest registered price increases.

The FAO recently said that the global cereal supply would tighten this year due to growing demand and poor harvests.

Local prices

Despite warnings of food shortage and the series of fuel price increases, there has been no increase in the prices of vegetables, rice, pork and poultry in the country, according to Agriculture Assistant Secretary Salvador Salacup.

“Agricultural commodities are very stable. We see movements on the positive side,” Salacup said Tuesday.

The prices of sugar and onions have even gone down, he said.

“The ongoing milling of sugar eased the supply shortfall experienced in the previous months. The supply improvements accounted for the P3 per kilogram price cuts at wholesale for both refined and brown sugar,” the Bureau of Agricultural Statistics (BAS) said.

The agency based its observation on the prices of commodities for the week ending on March 4. It added that the price of onions had gone down due to a large supply.

The white onion price was off by P5 per kilogram from the P30 prevailing price last week, while Red Creole was sold at P42 per kilogram, cheaper by P28 compared with last week’s quotation, the BAS said.

Low demand

Although certain factors can affect the prices of commodities, these have been offset by low demand, Salacup said. “Even if they increase, it won’t be as much because demand is low,” he said.

This was also the observation of the BAS. “Prices of basic food items such as rice, chicken, meat and cooking oil remained stable considering the sufficient supply coupled with slow market absorption,” it said.

The product that could see a price increase is cooking oil, Salacup said. This was due to the reduced volume of copra, which is down by 5 percent.

[uls]

From the link:

As the battle for Libya intensifies, oil production in the country has plummeted. In the rebel-held east it's down by as much as 90 percent.

Now OPEC is considering boosting output for the first time in two years.

Al Jazeera's Alan Fisher reports.

YouTube - Trouble for Libya's oil industry

Libya disruption has already been priced in last week pa

di na factor ang Libya sa oil price going forward

what you should look out for is disruptions in other oil producers

[uls]

Nagtaas pala kahapon...P45 na ata diesel.


http://newsinfo.inquirer.net/inquire...-P54-per-liter

yesterday, sa Araneta Ave QC -- Petron, Shell, Caltex are selling diesel at P45.50 while Cityoil is selling at P43.70

today P45.20 na Cityoil

[Monseratto]

2 days from March 11...

Vegetable prices up, PUJs drivers are now demanding a P9.50 minimum fare...

http://www.gmanews.tv/video/75246/so...oil-price-hike

[uls]

rising food and fuel prices will pressure the Bangko Sentral to raise rates

[hondaboot]

hmm... everything is really going as faster as i have expected. iba talaga ang greed ng tao

in 2k8, the speculations happened from summer to december. pero ngaun in a span of 3 months lang

tindeh, talaga. why can't those people with so many investments at the top do the most noble thing, mag-reduce kayo. it's your parasitic body that's your satisfying that why you have so much paranoia in losing money.

what's happening right now is matindeh ang maging fallout sa biz in the next months to come,make a supreme sacrifice naman for a change. losing money ain't that bad, it can be a very good teacher about life.

=====

sabi ko na eh, uulitin talaga yun 2k8. and then a mini subprime like scenario dito sa Pilipinas, nakow kawawa ang mga na lowdowns sa condo and cars. syempre, back to basic necessities muna after these speculations, maka-survive pa kaya ang sobrang daming malls dito sa'tin?

[uls]

hmm... everything is really going as faster as i have expected. iba talaga ang greed ng tao

in 2k8, the speculations happened from summer to december. pero ngaun in a span of 3 months lang

tindeh, talaga. why can't those people with so many investments at the top do the most noble thing, mag-reduce kayo. it's your parasitic body that's your satisfying that why you have so much paranoia in losing money.

what's happening right now is matindeh ang maging fallout sa biz in the next months to come,make a supreme sacrifice naman for a change. losing money ain't that bad, it can be a very good teacher about life.

wala sa vocabulary ng speculators ang word na "sacrifice"

sabi ko na eh, uulitin talaga yun 2k8. and then a mini subprime like scenario dito sa Pilipinas, nakow kawawa ang mga na lowdowns sa condo and cars. syempre, back to basic necessities muna after these speculations, maka-survive pa kaya ang sobrang daming malls dito sa'tin?

pag nagtaas ng rates ang BSP (it will happen), tataas din interest ng mga nangutang na hindi fixed rate

[mazingerZ]

Businessworld reported today that the BSP now open to increasing its lending rates

[anonemus]

so based on that, Petron and Shell are the ones who should have lower retail prices coz they have volume discount, refineries, and larger storage capacity

and small players can't lower their prices as much as the big players coz they don't have volume discount, no refineries, and smaller storage facilities



so based on the above points, the role of small players isnt to give big players competition (lower prices)

the role of small players is only to keep the big players in check. to keep big players from overcharging

the presence of small players prevents big players from setting their prices too high

so oil deregulation is actually working

--

big players can afford to lower their prices below small players' prices but they don't. why not? coz they don't have to.

small players aren't a threat to their business. if small players are a threat, they could easily lower their prices below small players prices and drive the small players out of business

this all goes back to my original point -- the big players don't have to lower their prices even if they can afford to. they have branding. their customers are loyal. their customers arent gonna defect to the small players unless the price difference is really big



maybe the small players' cost is lower coz they just import. they don't operate refineries

maybe the big players' cost is lower coz they have economies of scale

i don't know

but one thing i'm sure of -- the big players' margins are higher



maybe that's what you want to believe

Hmmm. Sabi ni Mareng Winnie:

(1) There is cartel at the global level but not in the country
(2) The big 3 are not overpricing
(3) The big 3 are not raking in excessive profits
(4) Deregulation is working
(5) No fixing is needed in the oil industry

http://www.gmanews.tv/video/47768/an...-an-oil-cartel

But Neal Cruz disagrees:

Then there is the oil cartel, not OPEC but the Philippine version of Petron, Shell and Caltex. We tried to break up this cartel with the Oil Deregulation Law which was intended to open up the market to many companies so that there would be competition among them forcing the prices down. But secret and intense lobbying was able to insert provisions that made the law a farce.

For example, a provision against predatory pricing was inserted. The new players cannot price their fuel lower than the price of the Big Three, which continue to agree among themselves on the price of their fuel.


Then there was supposed to be a transition period before complete deregulation. During this transition period, prices would still be regulated to give the new players time and opportunity to set up business and compete with the entrenched oil companies. In other countries that deregulated their downstream oil industries, this transition period is indefinite. Only when there was true and effective competition among all the oil players was the industry completely deregulated.


But what did President Fidel V. Ramos do? He issued an order limiting the transition period to six months. So, the oil cartel composed of Petron, Shell and Caltex still dictates the price of gasoline. Yes, there are many other oil companies retailing gas. But many of them buy their gas from the Big Three so they are forced to follow the price of the cartel. The others import their finished products from Singapore, so they are not able to give any meaningful competition to the Big Three.


That is why fuel prices rise every few days. Whenever the price of crude oil rises in the international market, the Big Three immediately raises the prices of local gasoline even if that higher priced crude oil has not yet been bought, brought here and processed into gasoline. The small players follow suit because they get their supplies from the Big Three.


Have you noticed that when the price of crude drops, gasoline prices drop by only 25 centavos, but when the price of crude rises, gas prices rise by at least 50 centavos or by a peso or two? Congress should correct these anomalies through legislation.

http://opinion.inquirer.net/inquirer...-news-from-JPE

[uls]

Hmmm. Sabi ni Mareng Winnie:

(1) There is cartel at the global level but not in the country
(2) The big 3 are not overpricing
(3) The big 3 are not raking in excessive profits
(4) Deregulation is working
(5) No fixing is needed in the oil industry

http://www.gmanews.tv/video/47768/an...-an-oil-cartel

sabi mo nagtataka ka baket pareho ang presyo

based on your last post, it seems you believe "may sabwatan" ang mga oil players kaya pareho ang presyo

now you post "sabi ng Mareng Winnie"

so what do you really think?

[uls]

small players import refined products

when their stocks run low and their next delivery hasnt arrived yet, they buy from the local refiners

some small players don't even bother to import. they're fully dependent on local refiners

what's this freaking discussion all about ba?

all refined products follow international pricing

it doesnt matter if a small player imports from abroad or buys from local refiners

the cost is more or less the same so the selling price is more or less the same

[anonemus]

sabi mo nagtataka ka baket pareho ang presyo

based on your last post, it seems you believe "may sabwatan" ang mga oil players kaya pareho ang presyo

now you post "sabi ng Mareng Winnie"

so what do you really think?

I still think there's collusion among the oil companies. See the points raised by Neal Cruz's article that I added

[uls]

I still think there's collusion among the oil companies. See the points raised by Neal Cruz's article that I added

from the article:

Yes, there are many other oil companies retailing gas. But many of them buy their gas from the Big Three so they are forced to follow the price of the cartel. The others import their finished products from Singapore, so they are not able to give any meaningful competition to the Big Three.

so why can't those who buy from Singapore "give any meaningful competition to the Big Three"?

coz the cost isnt lower than buying from local refiners

get it?

[uls]

from the article:

Then there is the oil cartel, not OPEC but the Philippine version of Petron, Shell and Caltex. We tried to break up this cartel with the Oil Deregulation Law which was intended to open up the market to many companies so that there would be competition among them forcing the prices down. But secret and intense lobbying was able to insert provisions that made the law a farce.

For example, a provision against predatory pricing was inserted. The new players cannot price their fuel lower than the price of the Big Three, which continue to agree among themselves on the price of their fuel.

but new players DO PRICE THEIR PRODUCTS LOWER

dito sa QC mas mura ang Seaoil, Unioil, Cityoil, Flying V, Nation

That is why fuel prices rise every few days. Whenever the price of crude oil rises in the international market, the Big Three immediately raises the prices of local gasoline even if that higher priced crude oil has not yet been bought, brought here and processed into gasoline.

^^^

sagot ko dyan

your cost is P100 and you're selling at P110

but your supplier raised his price to P110. if you dont raise your selling price to P120, and you buy new stock at P110, your P10 profit vanished

to maintain your P10 profit, you have to raise your selling price to P120 even if you bought the old stock at P100 so when you buy the new stock at P110, you still maintain your P10 profit

it's obvious the writer isnt a businessman

[uls]

let's say you decided to enter the fuel retailing business

you put some gas stations in your area called ANONEGAS

saan ka kukuha ng paninda mo?

mag i-import ka?

may sapat na puhunan ka ba?

kaya mo ba ang minimum order ng mga supplier?

can you buy 50 metric tons of diesel? (that's 1 ship)

do you have on-land storage?

if not, do you have floating storage?

doesnt seem so easy now huh?

bili ka nalang sa local suppliers

20,000 liters lang per order (1 tanker truck)

hindi lahat ng new players meron kakayahan mag import ng refined products

that's why there are new players who buy from local suppliers nalang

it's less hassle, requires less capital

even if the govt allowed new players, the new players are not big enough to compete with the big boys

it takes a lot of capital to play in that playground

as usual, it's survival of the fittest

[safeorigin]

predatory pricing explained by mises institute:

http://mises.org/journals/qjae/pdf/qjae6_1_2.pdf

I have demonstrated the difficulties of explaining the theory of predatory pricing using the neoclassical theory of the firm. In fact, to paraphrase Bork
(1978) in his criticisms of antitrust law, predatory pricing is a theory “at war
with itself.” Economists who insist on giving credence to such a theory find
that they must go “outside the box” in order to adequately explain their
points.
However, the law of noncontradiction demands that one either stay
“inside” or “outside” the neoclassical theory of the firm. One is not intellectually free to use the theory at one time to explain economic action, and to
discard it at another. If the theory of the firm does not apply in all explanations of firm behavior, then it cannot apply at all. If economists cannot explain
the theory of predatory pricing consistently with their models a priori, and if
they are unable to conclusively observe a posteriori that successful predatory
pricing has, indeed, occurred, then perhaps it is time to cast this particular
theory onto the ash heap of intellectual history

[digitalron]

The public forgets that despite the presence of other players in the oil industry, the top three (Petron, Shell, Chevron) still accounts for nearly 80% of the market share (as per DOE's first half of 2010 statistics, http://www.doe.gov.ph/DO/Report2010.htm)

The remaining 20% is then divided into many smaller players, none of which has more than 4.4% share. What does this mean? It means that the smaller players can only generate so much income from their sales, so that a difference of 50 centavos in price can have a huge impact on their profits (or losses).

To illustrate, I'll do some rough estimates based on the same report:

Daily Philippine Fuel demand is at 310,000 barrels a day, or roughly 50,000,000 liters. Of this, 60% is for regular, premium, and diesel fuel.

Based on market share (rounded off for ease), the following would be a rough approximation of their daily fuel sales in millions of liters (based on their market share in %)


Petron (38%) 11.4
Shell ( 28%) 8.5
Chevron (12%) 3.6
Total (4%) 1.2
Seaoil (2%) 0.6
Jetti ( 1%) 0.3


If we peg their margins at say, 10 pesos per liter, their daily profit would be, in millions of pesos

Petron---114
Shell----85
Chevron--36
Total----12
Seaoil---6
Jetti----3


But we know that the ratio of overhead to revenue for smaller players would be bigger because they don't have the advantage of economies of scale. So, this is the reason why the likes of Jetti or Seaoil or Total won't be able to lower their prices too much: it would wipe out their revenue and cause them to lose money.

Besides, the smaller players cannot guarantee that lowering prices would automatically increase their sales volume significantly; there would probably be a bit more customers, but it won't be enough to offset the volume being addressed by the Big Three. Why? Sheer number of gas stations alone. Petron has 1200, Shell around 800. Seaoil has about 170 (based on their website).

Collusion? Perhaps. But it's really just capitalism at work, with us seeing market dominance in action.