Big 3 eye Total on price cuts

The oil majors are likely to reduce their prices if Totalfinaelf Philippines Inc., considered to be the fourth largest oil company in the country, will roll back its prices, the head of a consumer group said yesterday.

"If Total will lower its prices, this is where competition sets in. Total is considered a major player now because of its size," Consumer Oil Price Watch chairman Raul T. Concepcion said in a press conference.

Concepcion noted that Total has the backing of one of the biggest oil companies in the world.

He said the "Big 3" will have a hard time if they will not adjust their prices correspondingly as this will affect their competitiveness. Consumers will go and patronize Total if they see that its prices are much lower than those of the "Big 3", he said.

At present, the country’s oil industry is dominated by Petron Corp., Pilipinas Shell Petroleum Corp. and Caltex Philippines Inc. which have been in existence even before the deregulation of the industry in 1998.

Total, considered the biggest among the new entrants, entered the local oil industry in 1998. At present, it has more than 26 gasoline stations all over the country. By 2003, the company targets to operate a total of 100 service stations.

The mother firm, TotalFinalelf is number one in Europe and is among the world’s five largest oil and gas companies. This global petroleum giant operates 20,000 service stations in more than 100 countries. Its operations cover both upstream and downstream areas of the oil industry, ranging from exploration, development and production of crude oil gas, refining, and marketing of petroleum products. It is also active in the trading and transport of both crude and finished products.

Last Monday, two new players announced that they would trim down their prices by 20 to 30 centavos per liter effective yesterday.

As of press time yesterday, it was learned that Flying V implemented a "selected" price rollback. This means that it has not yet carried out a system-wide price cut.

A source at Flying V said it has reduced prices in seven service stations – in Shaw Boulevard, Cainta, Valenzuela, Balunbato in Quezon City, North Fairview, King Fisher in Lagro, Quezon City – as of last Monday.

Petron Corp. vice president Antonio Pelayo said they are willing to adjust prices based on "competitive pressures." "I think Total is one of the most aggressive among the new players. We also have to look at what Total is doing. In the end, after considering a lot of factors, there are competitive pressures that we have to contend with. But we rather wait than rollback today and increase tomorrow," he said.

Meanwhile, citing the need to exercise their corporate social responsibility at a time of deepening economic difficulties, opposition Sen. Teresa Aquino Oreta called on big oil companies yesterday to follow the lead of new players in the industry by also reducing prices of their petroleum products by at least 25 centavos per liter.

Oreta said softening crude oil prices in the world market brought about by fears of a global recession should prompt the "Big 3" to cut prices of gasoline and diesel.

"These big oil companies should follow the lead of new, smaller players in the market by announcing similar, if not bigger, oil price cuts not only in response to global developments but also as their contribution to the survival of our economy during these hard times and in aiding ordinary Filipinos burdened with rising living costs," Oreta said.