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Saturday, February 04, 2012

Entry of new players in Bohol Could bring down fuel prices?

Rey Anthony Chiu 

TAGBILARAN CITY, Bohol, Feb. 3, 2012 (PIA) – For twice now, gatherings of key industry players and the Department of Energy to discuss the much controversial oil and fuel pricing in Bohol arrived at a similar conclusion. 

And for Bohol Governor Edgar Chatto, the rather queer circumstance only proves that Bohol leaders’ analysis has been right all the time: put up more competition and it saps monopolists wrists and play fair. 

As early as October of last year, meetings in Bohol seeking for solutions to the seemingly wayward determination of prices of fuel in Bohol boiled down to accepting more competitors. 

That early too, Bohol sent out invitations to new players to go and see the market prospect in Bohol. 

A study by the Department of Energy’s (DOE) Oil Industry Management Bureau has pointed out that intensive price wars were brought about by increased competition in both Metro Cebu and Davao. 

“These price wars force everyone to offer their products low and protect their market share or lose it to the new kids on the block,” an observer during the forum at the Mansion remarked. 

DOE Undersecretary Jose Layug also thinks similarly. 

According to the DOE study, lower prices in Cebu are due to 24 new players while Davao has 67. 

While oil price is deregulated, the DOE says price determination has been relinquished and is now in the hands of dealers who base their prices on prevailing market forces, Usec. Layug explained. 

But as to the case of the entry of new independent players, major dealers are said to protect their market share and struggle to put up a fairer market price. 

This situation has always been the case in most cities and provinces where independent players have joined local markets share, Layug stressed. 

Since last year where Bohol green-lighted the entry of independent players, a total of seven independent player filing stations have stood up, 5 of which are in the towns while two are located in Tagbilaran. 

Gov. Chatto however pointed out that these two, which are not even the bigger independent players, can hardly offer their prices at a lower rate and are just at par major players’ prices. 

In Cebu, major industries have reportedly picked aggressive pricing to survive the competition. 

According to the DOE again, and citing comments from Pilipinas Shell, the proliferation of oil products which have illegally entered into their territories affected their pricing. 

Moreover, selling of these by entities without the proper permits, payments of taxes and are wanting compliance with the Philippine National Standards allow them to thrive by marketing products at significantly lower prices. 

With this condition prevalent in an area, major dealers are forced to adjust prices accordingly to compete. 

In the foregoing situation, Gov. Chatto said he wants to host another meeting with Shell, Petron and Caltex along with independent players to open up the fields of competition in Bohol and finally settle the price discrepancy. 

Usec Layug, speaking for DOE also committed to bring to Bohol old and new players. (30)

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