Is Garcia willing to pit his OilEx against Big 3?
WE have not heard over the long weekend from either the oil companies or Rep. Enrique T. Garcia on their reaction to our compromise formula that would mean a co-existence of the Big 3 and the National Oil Exchange (OilEx) proposed by the Bataan congressman.
But our ever-alert readers were reacting within hours of the publication in the Internet of what one of them called the “Pascual Formula.” The early consensus among them was in favor of the compromise as proposed in our last Postscript (04/30/00).
We’re inviting readers to join the discussion and submit their opinion via our new email address FDPascual@journalist.com or deliver them directly to our pigeonhole at the PhilSTAR base in Port Area.
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THE compromise formula we’re asking congressman Garcia and the Big 3 to consider is basically this:
- The oil firms will keep their refineries, storage facilities and gas stations to retail their branded products. They can join the international bidding to be called by the National Oil Exchange, but will not be required to buy refined products from the OilEx.
- Operating parallel to them, the National Oil Exchange proposed by Garcia will buy gasoline, diesel and other petroleum products directly from the lowest bidder anywhere in the world. The OilEx will store its supply initially in the Subic-Clark depots left by the Americans, and compete with the Big 3.
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THE Big 3 cartel and the OilEx proponents have taken firm opposing positions. We’re concerned that the scattered debates have been dragging, while consumers continue to suffer under capricious fuel price fluctuations allowed under deregulation.
We submit the compromise formula with the hope that it could lead to mutual accommodation and cut short the protracted debate. The formula needs refinements, but details could be fleshed out after an agreement in principle emerges.
The formula will allow the Big 3 to hold on to their multi-billion-peso investments and compete, while leaving enough working area for congressman Garcia and those who believe in his OilEx to demonstrate that their idea could work.
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GARCIA’s idea, embodied in House Bill 8710, is to create the OilEx that will buy cheap gasoline and other oil products from anywhere in the world and retail them at prices lower than those of the Big 3.
The ulterior motive is obviously to liberate the consuming public from the monopolistic stranglehold of the foreign-controlled oil firms that import crude oil, refine it and market the finished products.
The worst scenario is for the foreign-controlled oil firms to fold up in the face of a state monopoly (the original concept of OilEx) in the marketing of oil products.
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GARCIA’S idea presupposes that there is money to establish and operate the giant OilEx enterprise, that cheaper oil products are available elsewhere, and that their prices will stay low even after the import/handling costs and a markup are tacked on.
He says that some 40 refineries and traders would bid to supply the OilEx requirements, but he has not identified them. He simply cites Singapore where, he said, the ex-refinery price is lower by $3/barrel compared to Philippine prices.
He has not explained, however, how the pump price will remain lower than the Big 3 price after the handling costs, taxes and markup are added.
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WE propose the use by OilEx of the government’s Subic-Clark storage facilities that are now being leased by the oil firm Coastal. These facilities have a capacity of eight days, compared to the 30-day inventory in the depots of the Big 3.
Using the sizeable Subic-Clark depots, the OilEx with its vaunted lower prices has the potential to control almost a fourth or 25 percent of market volume.
With a 25-percent share to start with, the OilEx immediately has the volume to operate as a major player. At least it’s bigger than Caltex, whose market share is only some 23 percent.
The ensuing competition between the Big 3 and the OilEx should be good for the consuming public.
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READERS, meanwhile are encouraged to tell us what they think of the compromise formula – if they AGREE or DISAGREE with it. Some pointers:
When sending your Agree/Disagree vote, please indicate also your age, sex, location and the car brand/model that you own, drive or plan to buy. These additional data are only for statistical purposes and are strictly confidential.
Your name, however, is presumed to be publishable unless you specify that it be kept confidential.
Kindly add a clear, concise paragraph as comment. With the heavy volume of incoming mail, we have programmed our browser to cut arbitrarily any message exceeding 50 kb. We also delete mail with attachments without bothering to open or preview them.
Please use your original email address provided by your ISP (Internet Service Provider). Secondary addresses such as those from yahoo and hotmail are more difficult to trace or verify.
Send email to: FDPascual@journalist.com with “POSTSCRIPT POLL” in the subject line. If you’re using postal mail, address it c/o PhilSTAR. Or deposit it in our pigeonhole at the PhilSTAR base in Port Area.
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THE first reader to react to our formula was Emer Cato using an aol (AmericaOnLine) address. His email came at 2:56 a.m. last Saturday, while readers in Manila were still sleeping and unaware of what the Sunday STAR had in store for them.
He said: “Whoever thought of that compromise formula is a genius! I wholeheartedly agree with it. Now the Big 3 has no more valid reasons to oppose the creation of a National Oil Exchange as they retain ownership of their oil depots. I just hope that the President and his advisers will see the benefits for the long suffering populace. I do hope that this compromise formula will be adopted by our lawmakers.”
(Footnote: While we in Manila are sleeping, our compatriots in the States are still wide awake. Although still living in the previous day we just left behind, some of them are already reading the Online edition of the STAR off their computer screens.)
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MIGUEL Bolos: “Agree! Whoever thought of the idea is a genius. There is nothing better than allowing market forces to determine the merit of the proposed Oil Exchange.”
Glenn Ouano: “I agree… to have a reasonable local market fuel price between consumers and with the Big 3 oil companies.”
Nestor B. Malonzo, Angeles: “Our lawmakers should seriously consider this Pascual Formula. In fact, it should have been put forward a long time ago. This is a challenge to the oil firms who must show that they are not afraid of open competition, and to Rep. Garcia who must show that his idea is feasible with an initial 25 percent of the market.”
Bing using a zambo.i-next address agrees, not with our compromise formula but with the oil exchange idea: “Garcia’s OilEx will benefit the Filipino people, because the main concern is lowering the price of oil. The worst scenario may happen where foreign oil companies may close, but who do we think should benefit, the Filipino people or the foreign oil companies. It may kill foreign investors, but majority of our people will enjoy the controlled price of oil. I think, we should consider Garcia’s OilEx and change the tide of continued oil price increases. I agree with Garcia’s OilEx.”
Manuel Diaz, aol address: “For the OilEx to become a reality, Congress should first abolish the Department of Energy and change it to the Department of Oil Cartel. With the present leadership of the department, the OilEx will remain an impossible dream. The Department of Energy is the official representative of the oil cartel.”
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GREG of laguna.net agrees also, but expresses concern over operational problems of the OilEx. He says:
“The problem of the Garcia group will be capital (lots of money) and, assuming they can use the Subic oil tanks, distribution facilities. The Caltex 23-percent market share is supported by a nationwide distribution network which the Garcia Group does not have at this time. They either have to establish their own network (expensive and will need years to set-up) or they pass through the existing Big 3 gas stations which will not be provided free of charge. Let’s keep the government out of the oil business.”
(But the OilEx will be government-sponsored, not a new corporation to be set up by Garcia and his associates. – fdp)
Another reader, Ronald S. Winkley, also anticipates some problems for OilEx: “So, the OilEx buys a stockpile of fuel. How will it get to the consumers? Does OilEx have: a tanker fleet, a network of service stations? Where are the OilEx petrol pumps? I haven’t seen any, they don’t exist, di ba? It will not work.”
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HOW to catch a thief lurking in the shop of a prestigious car dealer in Pasig (Postscript, 4/27/00)? Reader Larry Hipolito in Australia has an idea:
“There is a show here in Sydney that planted a hidden camera inside a car because the car cleaners were reportedly stealing loose change, even dollar notes, left in the car. Of course, they were caught in the act. Maybe you can ask the ‘Hoy Gising!’ people to join you in exposing these thieves.”