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  1. Join Date
    Jul 2007
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    #151
    Quote Originally Posted by archie123456789 View Post
    economies of scale states that lower cost in the long run BUT output increases.
    Yup. I'm not taking sides but my understanding of economies of scale is that the cost to produce decreases as output increases. Diseconomies of scale happens when the cost outweighs the benefits gained from achieving economies of scale this is because organizations that have reached economies of scale become more complex to manage.

    I'd like to understand better how this is related to economies of scale: "During lean periods, companies do not maximize their inventory of stocks, because it's not profitable to do so". Because as I understand economies of scale is all about strength in numbers. Maybe Galactus has a deeper understanding of how the petroleum industry operates.

    I have nothing against oil companies but why is it that when it comes to increasing prices they are so aggressive but when it comes to decreasing prices they are so conservative.
    Last edited by _Cathy_; October 24th, 2008 at 06:07 PM.

  2. Join Date
    Sep 2004
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    #152
    Again your ignorance is showing. Try to read it again. It says there that it is simply one of the options to achieve economies of scale. In practice, companies will try buy in bulk when the price is low, thus getting even lower prices. Wala naman akong sinabi they should bulk-buy pag mataas ang presyo ah.

    Ang contention mo kasi, ito:
    its a simple logic really, why build tanks that you have no intentions of filling? sayang puhunan sa pagawa.
    You're saying na parating PUNO ang tanks nila? Kasi sayang ang puhunan. II already explained to you na that is not necessarily the case. You're telling us na kahit mataas ang presyo ng langis, pupunuin pa rin nila yung tanke nila?

    Get back to school, and learn the basics! May pa-FS FS analysis background ka pang nalalaman dyan...

    But hey archie123456789, don't get me wrong. Di naman ako namemersonal eh. Palitan lang naman tayo ng opinyon dito. Pasensya na kung medyo magaspang ang dating ko. That's my nature, I guess...
    Last edited by Galactus; October 24th, 2008 at 05:47 PM.

  3. Join Date
    Nov 2005
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    39,081
    #153
    Quote Originally Posted by gearhead View Post
    Question: Why is the price per barrel falling? There was a report in the TV news that said it had to do with the possibility of less usage in the US which represents the biggest oil using market. If that is the case isn't it to the benefit of the oil producers that people get a lower price so they buy? Obviously the Philippines is not a big market so it doesn't matter. But by keeping the price up there will be less consumption of petroleum products thus the oil producer's lowering of price did not work for them? In the end the middle man profits but not the producer.

    Just asking
    YES, there is an ideal price for crude oil.

    remember when crude oil was soaring early this year, there was already talk of demand destruction.

    But there was still strong demand for oil futures contracts.

    Speculators still kept bidding up the price of oil till it hit the $147 peak this July.

    As oil price climbed past $130, demand destruction became more evident.

    Even the oil producers were saying oil price shouldnt be that high.

    Past $145, there was no more momentum to sustain oil price...

    Actually, before reaching that high, the smarter guys already sold off their contracts and exited the market. They made billions.

    The dumber ones were left holding on to the $145+ future contracts and couldnt find buyers.

    They has to sell the contracts at a loss.

    that's when oil price started to fall...

    ---

    Now oil has dropped to a level where oil producers are now complaining.

    Kaya may meeting sila ngayon... they will cut oil production to support the price of oil.

    For the oil producers, $70 is low enough.

    They say $70-$100 is ideal.
    Last edited by uls; October 24th, 2008 at 05:53 PM.

  4. Join Date
    Feb 2008
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    #154
    Quote Originally Posted by Galactus View Post
    Again your ignorance is showing. Try to read it again. It says there that it is simply one of the options to achieve economies of scale. In practice, companies will try buy in bulk when the price is low, thus getting even lower prices. Wala naman akong sinabi they should bulk-buy pag mataas ang presyo ah.

    Ang contention mo kasi, ito:


    You're saying na parating PUNO ang tanks nila? Kasi sayang ang puhunan. II already explained to you na that is not necessarily the case. You're telling us na kahit mataas ang presyo ng langis, pupunuin pa rin nila yung tanke nila?

    Get back to school, and learn the basics! May pa-FS FS analysis background ka pang nalalaman dyan...
    ang sabi ko nga... majority... so konte lang oorder nila kung sakali bumaba yung price and that will not be cost efficient because of the cost of shipping... etc.

    sabi ko nga im NO expert but have a background... do you wanna result to personal attacks? go right ahead... but if you want to go physical..... im right here bro!

  5. Join Date
    Jun 2007
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    #155
    Quote Originally Posted by creepy View Post
    It's unbelievable how embarrassingly closed-minded someone here is.

    Simple lang -- if any oil retailer (be it Caltex, Petron, Shell, Uni-Oil or SeaOil) is selling its products at a price higher than anyone else... DON'T BUY from that retailer. Buy from someone else.

    Kung talagang mas mura ang Uni-Oil, bibili ang mga tao sa Uni-Oil. No need for the histrionics from someone here.

    That's how the market works. Stop this whining.

    ??????????

  6. Join Date
    Aug 2004
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    22,710
    #156
    Unless anyone here actually works for an oil company, or works as an auditor for an oil company, we may never know the true market value of the gasoline on the streets right now.

    It's all baloney and hearsay on either side, unless you can provide concrete evidence either pointing to low profitability or excessive profit on the part of the operation.

    Like I was saying, why don't we try to look at market prices and find out? I'm surprised that I'm the only one interested in seeing how big the "excessive markups" of the Big Three really are.

    This place is the Diesel Depot. It used to be a jeepney cooperative, but the prices are kept at the same level nowadays since the local JODA is the biggest clientele for this station. This is the lowest diesel in our market area, just 15 kilometers south of manila.



    43.25. That's tax-free pricing because this station only services PUVs. I've heard complaints of the quality of their diesel (dirty, supposedly, when it was still a coop-only station... I don't know how it is, nowadays).

    This is Nuez, an independent. This used to be a Shell station, but the franchiser couldn't make a profit and had to sell off. Actually..., there are two gas stations that closed down on the same strip, and one that closed for a while and had to be renovated.... wow.. I suppose they're making a ton of money, huh?



    Diesel at 43.85. No PUV discounts mentioned, so that's likely PUV prices.

    Here's a "Diesel Depot" that used to be a Jetti station (which also went out of business).


    Without the need to service the cooperative that funded it, PUV pricing is 44.75.

    Now here's the big three stations in the same area:


    Petron. 44.91 for PUVs. 45.91 for regular buyers. This is directly opposite the former Jetti / now Diesel Depot station. Shell right beside it has the exact same price.


    Caltex. 44.90 for PUVs. Near the Coop and Nuez. Regular diesel is 45.90.

    ---

    Price gouging... errh... premium pricing, is surprisingly mild. A difference of under 2 pesos, and just over 2.5 pesos against the coop-price... which is probably the bare minimum you can charge and still stay in business (though the fact that these undercharging stations have changed hands numerous times tells you how low margins are.

    A 2 peso margin... now think about this... 7-11 is the biggest, most profitable convenience store chain in the metro. Together with MiniStop, they have a common, competitive level at which they mark-up their products. A can of softdrinks costs about 21 bucks at 7-11... around 20 bucks at MiniStop.

    Smaller convenience stores, non-branded ones... obviously can't charge that much for softdrinks (though some small restaurants do), so they sell closer to supermarket level. Supermarket level is aboout 13 pesos, last I looked... though it's getting higher.

    That's a markup increase of over 30% for the "brand". It's not uncommon. Remember when Sarsi and Pop were still alive and softdrink bottles were in vogue? Back then, you would pay over a piso in markup for a Coca Cola or a Pepsi over a Sarsi. That was maybe 20% more than a Pop Cola (back when softdrinks cost around 5 bucks...)

    In this case, because gasoline and diesel are a market sensitive and price sensitive product, the markups for "brand name" diesel aren't as high.

    With "Diesel Depot" versus Shell or Petron, the markup is almost non-existent... but compare prices between that and the Diesel Depot coop-prices... a 6% difference in total price, which drops to under 4% difference when you compare like-to-like pricing for PUV diesel WITHOUT the extra taxes. A PUV driver would be paying just 4% more at the major players. Who have (according to those who've tried the coop) cleaner diesel.

    There's a difference, but it's market pricing. Considering you can pay a bigger markup when buying chicken or fish from the supermarket versus the palengke, I think we should all be chasing after SM (and 7-11) for their "non-makabayan" pricing....

    Again, don't shoot the messenger. If there's anyone to take issue with, it's OPEC. It's their greed that allowed speculation to push oil prices higher and higher... as they allowed speculators to push oil futures through the ceiling into some otherworldly level. And it's their desperation to get those investors back that's making them propose to artificially keep prices high. But there's politics involved. Note that the populist Venezuelans, whose president said he would sell to all of the USA's enemies, are in support of the production cut, while the tyrannical, imperialist pigs (lol) of Saudi Arabia are against it... because Saudi can survive low oil prices... socialist producers like Venezuela and Iran can't.

    An executive of Eastern Petroleum (not a big three player, mind) chided Recto for getting people's hopes up. He's not a financial analyst. He doesn't know how the price of fuel is broken down, what exact tax the companies are paying for for fuel and the cost of operational overhead... which is what kills many local stations, be they "Big Three" or "small player"... it's still the same problem... running a gas station costs money. You're not just repackaging gasoline. You're paying for transport of the fuel to your station, the cost of running the station, paying the gas boys, land tax/rental/lease, business tax, E-VAT, return on investment, etcetera.

    That's why franchisers set a minimum level of markup for franchisees... because if you start a price war with other gas station franchisees, they will die off, simply because they won't have enough net profit to pay off their loans.

    That's also why some fleets buy in bulk, because elminating the middleman (gas stations) removes a hefty chunk of the price.

    If people think that the profit is at such an insanely gross level... why don't they just set up their own gasoline stations? Independents don't need their own refineries... they can just buy overseas from the lowest bidder. I don't doubt you could get the gas and diesel very cheaply... but try maintaining a gas station without money to pay for maintenance of the equipment.

    SeaOil was offering franchises for under 2m pesos a while back (that includes the equipment, too... one package was just 1m pesos)... if a government official thinks gas is way overpriced, they have enough money in their pockets to open up their own gas stations and start charging people ten pesos for gas... let's see how long the business lasts.

    ---

    Again... if you think fuel costs too much, buy from someone else. The level of penetration of independents in the market is now big enoough that you will pass by at least one independent on any route you take through the city. (on my trips inside the city, I pass at least three on any trip... and there are three or four independents near my house in the province) The question is... why don't you buy from them? Why do you pay for the "excessive" markups of the Big Three?

    Ang pagbalik ng comeback...

  7. Join Date
    Jun 2007
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    #157
    Quote Originally Posted by niky View Post
    Again, don't shoot the messenger. If there's anyone to take issue with, it's OPEC.
    Im surprised you said this. When you hit me with you shame thing, you are attacking me personally. It was a hit out of nowhere.

    Why did you singled me out? Because of my attacks on oil companies?

    O may personal grudge ka ba sa akin?

    It's their greed that allowed speculation to push oil prices higher and higher... as they allowed speculators to push oil futures through the ceiling into some otherworldly level. And it's their desperation to get those investors back that's making them propose to artificially keep prices high.
    Now, you are talking. Tama yang sinabi mo.


    An executive of Eastern Petroleum (not a big three player, mind) chided Recto for getting people's hopes up. He's not a financial analyst. He doesn't know how the price of fuel is broken down, what exact tax the companies are paying for for fuel and the cost of operational overhead... which is what kills many local stations, be they "Big Three" or "small player"... it's still the same problem... running a gas station costs money. You're not just repackaging gasoline. You're paying for transport of the fuel to your station, the cost of running the station, paying the gas boys, land tax/rental/lease, business tax, E-VAT, return on investment, etcetera.
    Kaya oil companies tinitira.

    Ano ba yang gas stations na yan. Franchise lang yan.

    Parang SM. Kumikita SM pero mga tenants nya hindi.

    Kasi, ano mang mangyari, kita pa rin SM. pero tenants lugi pag walang benta..

    Dapat banatan oil companies. Talo gas station owners. Sa kanila hirap sa oil companies ang sarap.

    That's why franchisers set a minimum level of markup for franchisees... because if you start a price war with other gas station franchisees, they will die off, simply because they won't have enough net profit to pay off their loans.
    Yang nga. Kaya yung ibang cooperatives gusto nang mag-import ng direkta...


    If people think that the profit is at such an insanely gross level... why don't they just set up their own gasoline stations? Independents don't need their own refineries... they can just buy overseas from the lowest bidder. I don't doubt you could get the gas and diesel very cheaply... but try maintaining a gas station without money to pay for maintenance of the equipment.
    naparaming gusto, im telling you.

    lalo na ngayon na mababa na franchise fee, lalo Seaoil

    pero problem, hawak sila sa leeg ng mga oil companies.

    SeaOil was offering franchises for under 2m pesos a while back (that includes the equipment, too... one package was just 1m pesos)... if a government official thinks gas is way overpriced, they have enough money in their pockets to open up their own gas stations and start charging people ten pesos for gas... let's see how long the business lasts.
    Sea oil is expanding based on their recent press release.
    ---

    Again... if you think fuel costs too much, buy from someone else. The level of penetration of independents in the market is now big enoough that you will pass by at least one independent on any route you take through the city. (on my trips inside the city, I pass at least three on any trip... and there are three or four independents near my house in the province) The question is... why don't you buy from them? Why do you pay for the "excessive" markups of the Big Three?

    This is the gist of the boycott thread...nauna na kasi galit ng iba...

  8. Join Date
    Jul 2007
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    452
    #158
    Quote Originally Posted by roninblade View Post
    waw, ngayon ko lang nabuksan 'tong thread. meron pala entertainment dito.
    ahahahah
    Very action packed.

    Questions lang: Okay so it was explained that the oil companies bought at a higher price and need to deplete that stock before rollback. When will the "expensive" stock be depleted you reckon?

    Also wasn't it possible to operate stations with a lower pump price when price per barrel was lower? i.e. if the price per barrel was where it was at a certain point it had been is it fair to say that the pump price should generally be equivalent to that plus say a bit of inflation or whatever? Just asking since the issue of the stations was raised.

    Just asking. Peace. Sabay ilag.

  9. Join Date
    Jun 2007
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    #159
    Oil Companies should roll back the prices now!!!


    ..... by 10 pesos for diesel and 7 pesos for gasoline!!

  10. Join Date
    Feb 2008
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    5,179
    #160
    Quote Originally Posted by Galactus View Post
    Again your ignorance is showing. Try to read it again. It says there that it is simply one of the options to achieve economies of scale. In practice, companies will try buy in bulk when the price is low, thus getting even lower prices. Wala naman akong sinabi they should bulk-buy pag mataas ang presyo ah.

    But hey archie123456789, don't get me wrong. Di naman ako namemersonal eh. Palitan lang naman tayo ng opinyon dito. Pasensya na kung medyo magaspang ang dating ko. That's my nature, I guess...
    then dont bring up your "magaspang" attitude here... learn some manners.

    dont tell that a person is ignorant IF they are saying that they just have a BACKGROUND and not an expert. i might be NOT well versed at that aspect but i can definitely school you on other aspects!

    anyway, apology accepted just dont do it again.

rollback!!!