Saturday last week, the price of diesel went up by 3 pesos, considered the highest price hike to date. Come Monday, a rollback was announced amounting to 1.50 pesos. Why is that when there’s a fuel price increase, oil companies uses the same rate? Do they get their oil from the same supplier? Do they buy it at the same time?
In our town, we have all the major oil companies, Shell, Caltex and Petron. At a neighboring town, there’s Flying V who was first to jump on the 1% bio-diesel blend. Geographically between two big players is an “un-branded” fossil fuel reseller whom according to an associate buys its fuel from the big oil companies mentioned above. Whoever gives the lowest wholesale price, that’s where the un-branded reseller buys its fuel. As a result, he gets to sell or compete with the big oil companies at a lower price. I noticed Petron does not care to lower it’s price to compete with the un-branded reseller and even Caltex since geographically, they are far from the un-branded reseller. Shell on the other hand is just a few feet away, and to compete with the unbranded reseller, sells their product at the same price with the un-branded reseller. This way worked for Shell, as one gasoline attendant would say, they lowered their price at par with the unbranded reseller to get more customers. They believe that by offering the same price, consumers would prefer Shell to the unbranded reseller. As a result, we enjoy a lower or sometimes the same price for diesel with those from Metro Manila, which should not be the case since the cost of transport of fuel is factored on the selling price at the pumps.
Rising oil prices is a global phenomenon. My friend who resides in Germany told me 2 months ago that the price of diesel there is 90 pesos per liter. Knowing that, do you think we are lucky that the price of diesel hasn’t broken the 60-peso price? Even if we look at it as a global crisis, do you think our government can’t do anything about it? Are the militant people wrong in staging rallies in front of big oil companies demanding for cheaper fuel?
The Arroyo administration can do something about it. So it pleaded with Petron for a rollback and it did with 1.5 pesos. The answer to skyrocketing oil prices is as of the moment Petron. The government has a considerable stake on Petron (40%) but sadly, instead of increasing its shares and taking full control of Petron, the government is opting to sell it’s remaining shares to turn it into funds for infrastructure that we all know majority of it would not really materialize! Screw deregulation! What would happen if the government takes over Petron? When I say, “take over,” not the hostile one but the legit corporate buying of shares that the government can exercise. The government can now freely adjust fuel prices that should be lower than the other big players are setting on us. Thus will result in lowering of fuel prices that is reasonable to all stakeholders just like what happened when Petron lowered their prices by 1.5 pesos, the other oil companies followed suit.
Come to think of it, the unbranded fuel reseller looking rag-tagged with surplus pump machines has done a better job in exercising competition than the big fat government who has the means but tries to do the moronic thing. With this, I really think Sec. Angelo Reyes should resign. It’s okay with me if he makes a fool of himself, but being in government and as retired military personnel, he gives the men in uniform a bad precedent.
The picture above is from my friend Vhlad
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