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ROUGH CUTS | Why not reacquire Petron and compete?

WHEN the government after the so-called EDSA people’s power revolution decided to deregulate the oil industry, the purpose was to give opportunity for free competition to evolve. And since oil and its derivative products are considered integral in the growth of the economy of any country like the Philippines, even as its affordability is basic to the stability of all economic endeavors, it was presumed that oil and its by-product users will patronize the ones that are priced the lowest.

     The presumption was so because it was expected then that with the deregulation policy of government many new players in the oil industry will venture into the trade and offer the more affordable cost of their products because they were expected to have less operational overhead compared to the long existing foreign-owned big ones.

     It was also because of this deregulation policy of government that the once nationalized Petron Corp., one of the three largest multi-national oil companies in the country, was sold and acquired by San Miguel Corporation now controlled by businessman Ramon Ang. But contrary to what was expected as hyped by the deregulation proponents then, the expected reduction in the cost of oil and its by-products did not happen. Instead the large oil firms using the forces of the so-called global oil demands and the control in the volume of production by the oil producing countries dictate the pricing in the world market. The Philippines, being an oil- importing country, naturally becomes prey to the profit-greedy oil firms.

     Ironically, the so-called new entrants to the industry that were expected to provide the competition in terms of price affordability were instead sucked to the same caprice for huge profits. Except for a few of the new players everyone became at par and in time in the implementation of oil price hikes. Some of them even have higher increases than the big ones. And what makes it even more unfortunate is that the new players that offer lesser price per liter also have the quality of their products subject to suspicion. Their gas stations are also located in areas less travelled and their numbers are very minimal.

     With this situation in the so-called free market of oil products, we can only assume that the element of competition supposedly intended by the oil industry deregulation is more on how much the players could raise and justify the prices of their products. It is not letting new participants in the industry to compete in offering the oil product users the most affordable price.

     And since we are talking here of competition and low-priced fuel products we could not help but recall that some weeks back, San Miguel Executive Ramon Ang expressed his willingness to let go the ownership of Petron Philippines for as long as it is the government who wants it.

     May be the offer is worth serious consideration by the government. Yes, if the government can negotiate for a viable term for the reacquisition of Petron why not grab the offer? By acquiring again Petron the government may now be able to come up with a business venture that can provide competition to the other oil industry players that would be to the advantage of the oil using economy and the public in general. Petron is so huge an oil firm that the government can provide support so it could make downward adjustments in the cost of its products. Thus, once owned and operated again by the government the oil firm may not anymore seek a buffer fund for it to continue its business.

     We can be sure that with government on its back the oil firm can survive any challenge by the big players and may even force the latter into reducing the costs of their oil products. Again, a serious study on such suggestion may be imperative. That is, if the intention of government is to find relief to the ongoing crucifixion of the Filipinos with the endless increase in oil prices. 

     By then, we can be certain that the economy may be more vibrant and consequently everybody will be happy!

                                                                             

     

 

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