Big 3 behind high oil prices?

Big 3 behind high oil prices?

Exorbitant price?s of petroleum products in Bohol only show the greed of the top layer of the Big 3 cartel—that is the control of Shell, Caltex and Petron.

This cropped up through the marathon debate in public affairs program on the higher fuel prices in Bohol compared to other areas of the country.

Caltex distributor in Bohol, Leo Lim, said the governor and the Bohol representatives to Congress should maximize their access to Energy Sec. Jericho Petilla, because he believes that even with the Oil Deregulation Law, the government can still do some “gentle twisting of the arms”.

He said even de-branded or white stations take advantage of the prevailing prices implemented by the Big 3 gas stations.

Lim, disclosed that white stations that got their supply of petroleum products from sources for a much lower price should have lower selling prices.

However, white stations followed the price trending of the Big 3, in which way they got the higher net profit.

Instead of coming in as catalyst of a price war in Tagbilaran and nearby areas, white stations joined the bandwagon of price gouging.

Lim also disclosed that the shipment cost from Cebu to Bohol is only P2 per liter and since the petroleum products are higher by P4-P5 per liter in Bohol, gas stations will still have profit if they lower by P2-P3 pesos per liter.

Lim said the price war in Ubay that brought down the prices of petroleum products was lit up by a white station that dived to a much lower pumping price.

Having lost majority of their clients to the white station, dealers of the Big 3 in Ubay reported the situation to the national management and sought for lower prices to be able to bring back their patrons.

The lower prices in Ubay even attracted customers from nearby towns such as Talibon and the gas stations in Talibon also competed by diving to lower prices.

This should be done in Tagbilaran, considering that several gas stations that used to get their supply from the Big 3 had already gone independent.

Lim also disclosed that as the Manila office of Caltex refused to lower prices in Bohol, he already lost a number of clients.

He mentioned one in Dao that no longer gets its supply from Caltex and transferred to another supplier that offered lower prices and Caltex had to take down its signboard.

Another one that used to be a retailer of Shell also transferred to another supplier other than the Big 3, although the its new signboard had resemblance with the Shell logo and company color.

Another former Shell station near the APC has also taken down the Shell signboard but maintained the price within the range of the Big 3 prices, and just offered discounts instead.

Lim said the station should better declare an actual price without the discount so that the Big 3 agents in Bohol could cite the strategies of the white stations as enough reason to dive to lower prices.

Citing competition with white stations could be the only way to prompt the mother companies to lower their prices in Bohol.

Lim said he always send copies of the Chronicle to their Manila office whenever the issue on high prices of fuel in Bohol hugs the headlines.

He just laments that even Caltex stations would get supply from other sources most of the time, while he continued to maintain and provide repair assistance for the pumping facilities of these stations.

On the other hand, Lim said big establishments, and big transportation companies that have at least 10 vehicles are already entitled to be provided by the Big 3 with a pumping unit, that give them the advantage of having the wholesale prices of gasoline and diesel.

GOVERNMENT GAS STATIONS

Fed up by the futile moves against high prices of fuel in Bohol, the public generally supported the suggestion of Sangguniang Panlalawigan Member Tomas Abapo Jr. that the local government units should put up their own gas stations that will offer much lower prices.

However, there are apprehensions on the efficiency of the government to run a business. Some concerned citizens also fear that it might be another tool for corruption.

In an interview with DYRD Inyong Alagad, SP Member Abapo said the idea was hatched from a side comment of SP Elpidio Jala who said the government can bail out the consumers who are eternally at the mercy of oil companies by putting its own gas station to spur a real competition in the market.

SP Member Dionisio Balite, who was also beside Abapo in one of their meetings when the issue was tackled, supported the move even if a family member is running a gas station in Carmen.

This prompted Abapo to deliver a privilege speech last Friday espousing the idea that the government should give the local gas dealers a good competition.

 Abapo said he also learned that the same idea is being considered by the local government of Bacolod.

Moreover, the Oil Deregulation Law has no prohibition on any local government to venture into the oil industry, while the Local Government Code also has no prohibition on embarking into a public enterprise.

The idea of coming up with government-run gas stations is just one of the three bold steps that the SP Committee of the Whole chaired by SP Member Godofreda Tirol had come up.

The issue on the exorbitant fuel prices in Bohol is feared to have domino effect on the economy such as the prices of commodities and the fare rate.

WHITE FACTOR

Unlike “black market” of, say, dollars, oil supply for “white” gas stations, there are 26 of them, in Bohol are actually smuggled supply of gasoline and diesel particularly, local dealers told the committee.

But they are short of divulging to the committee the source of the oil supply in the form of petroleum finished products for “white” gas stations peddling the alleged contraband.

Local dealers added that supply for “white” dealers in the province do not procure their stock from the Shell-operated depot along Graham avenue here. And the supply of contraband is in the form of a “finished products,” meaning the crude form of petroleum does not pass through the processing or refinery in Batangas and other factories, the local dealers said.

Butch Abaya, Mr. Marjo Lim, representing his father, Leo Lim operating Caltex and Cortes Vice-Mayor Iven Lim representing his father operator of Shell in Cortes town, George Lim of Caltex J.A. Clarin, Ma. Shiela Rubillar of Seaoil-Talibon, Gerald Renolan of Filoil, Marilou Maboloc of Seaoil-Ubay, Evelyn Du of CPG-Petron and Gina Cag-ang of CPG Petron are among the local dealers of diesel, gasoline and other oil products who attended the said committee hearing.

Aside from Tirol and Abapo, the committee was represented by SP Members Abeleon Damalerio, Balite, Jala, Gerry Garcia, Venzencio Benjie Arcamo and Jovanna Jumamoy.

Transport Costs

In the course of the committee hearing, Vice-Mayor Lim later bared that one reason that might cause the soaring of the oil products in the province is that the cost of transportation is high.

He said that the existing Shell-operated-depot cannot accommodate the bigger volume that the transporter — big barge — is carrying for Bohol supply. Thus, the cost is too high which is apparently passed on to the consumers. But he did not categorically that the high costs of transportation is really passed on to the consumers.

Compared to pump stations in Ubay town, which offer lower prices, the Seaoil revealed it procure its own supply of petroleum from Cebu still but not the from the depot here. Seaoil has its own transportation that brings supply from Cebu direct to Ubay, Marilou Maboloc of Seaoil-Ubay said.

Filoil, on the other hand, gets its supply via tanker trucks on board on a roll-on-roll-off vessel from Cebu and berth on Tubigon port. But it’s still dependent on the pricing of the Big 3 in Bohol, Gerald Renolan of Filoil said. He said that Filoil still relies on the “dictate” of pricing from its main office in Manila.

Pump station operators admitted that consumers here are  fewer compared to Cebu, but they failed to relate compare the volume of consumption in smaller provinces like Siquijor of Camiguin where there are fewer consumers and population.

As to the plan of the provincial government to put its own pump stations, Manju Lim said “OK ra, it’s welcome.” But other dealers/local pmp station operators just kept mum about the said proposal.

SUPPLY FORECAST

Data gathered by the committee show that a total of 12,833,000 liters of Premium (R91) in terms of volume of distribution are recorded as supply for Bohol for the period January-June 2014, Tirol said.

The bulk of these is supplied by Petron with a total of 5,913,000 liters for the same period. This is followed by Chevron’s 4,916,000 liters and Shell’s 2,004,000 liters.

As to diesel, Bohol got a total of 17,789,000 liters during the same period, data showed. The biggest volume is supplied by Petron with a total of 7,923,000 liters; Chevron — 5,304,000 liters; and Shell — 4,571,000.

The Special (R95) gasoline totaled to 32,000 liters and Kerosene — 140,000 liters for the same period, Tirol said.(with reports from Ric V. Obedencio)

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