New oil players nudge the Big Three

A consortium (not a cartel?) of new players in the oil industry formally took shape last Tuesday at the New World Hotel when they introduced a newly formulated diesel fuel in the market.

City Oil, Eastern Petroleum, Jetti, Seaoil and Unioil have formed an alliance and launched "Pure Diesel" with a sulfur content of 0.05 it is touted to be the first diesel fuel compliant with the 2004 Clean Air Act. Studies show that too much exposure to sulfur can cause harmful effects to the environment and health.

If claims prove true this could be a boon to those owners of diesel engine vehicles that find it hard to pass the smoke emission tests that are needed prior to registration or those constantly stopped on the streets to undergo random emission tests.

The "first five" of the local oil industry claim that the revolutionary Pure Diesel is a lighter fuel indicative of lower sulfur content, with a narrower boiling range that prevents over fuelling in a diesel engine. Over fuelling is a condition that results in black exhaust smoke. It is further claimed that Pure Diesel is less corrosive to the engine, fuel injection system and the emission system. It also has the power to give the motor engine better combustion efficiency, which could translate to significant fuel economy.

A corroboration of these five upstarts in the local oil industry to market Pure Diesel has produced a total of 180 service stations where Pure Diesel is already available.

The "first five" of the new oil players were represented during the simple launch by Frederick Tagorda, president, City Oil, Fernando Martinez, chairman, Eastern Petroleum, Joselito Magalona, marketing manager, Jetti, Stephen Yu, managing director, Seaoil and Chito Medina-Cue, general manager for retail, Unioil.

What can also be significant in this move by the new alliance among the new players in the oil industry is their initiative to meet some of the stringent "clean air" standards set by the Clean Air Act way before its required implementation.

Many industry observers say that the move has placed some pressure on the "Big Three" to follow suit despite efforts to postpone their meeting the standards as it would undoubtedly increase their present processing costs. The new players, not having to content with recouping capital investments for refining facilities and would just merely import, have definitely an edge in meeting the standards set by the law.

Now this is indeed an interesting scenario shaping up in the local oil industry as we see the "Big Three" up against the "First Five." Three Goliaths against five Davids–not necessarily with the same moral representation.

Hey, We’ll Still Miss The Bus?

The new excise tax bill that would set new standards in determining taxation in the local automotive industry after having gone through several "make-overs" and postponements just might be finally approved by the President and signed into law.

The great attraction of this piece of legislature lies much on its projected effect on the prices of vehicles.

Considering that the new law would shift the determining factor for taxation from engine displacement and passenger capacity to its actual price as the vehicle leaves the plant, studies have shown that while SUVs , AUVs and highly priced vehicles would have higher taxes and therefore higher prices, the passenger cars or sedans would see some price reduction.

Correct?

Yes, definitely, but not necessarily so due to an emerging factor the currency slide.

With the steady fall of the peso against the dollar, the advantageous effects of the new excise tax law on the prices of passenger cars are steadily being negated.

Our good friend, the top marketing honcho of Toyota Motor Philippines, Mr. Danny Isla, woke me up early Tuesday just to share this thought with me. He said, "those postponing their purchase of passenger cars in the belief of being able to buy them at lower prices upon the implementation of the new excise tax law may just be in for a very big surprise."

Danny was very apologetic for waking me up but really sounded serious and very much concerned about this perception that would have been right all the way if not for the peso’s slide. He was worried that the loyal Toyota buyers who may have been postponing their buying, while patiently waiting for the passage of the new tax law, would be disappointed to find out that there may not be a decrease in prices, worse an increase.

Well, I guess many of us will "miss the bus" once again but we can’t blame Toyota nor the other car manufacturers for this unfortunate prospect. We just seem to be having a major convergence of political events that we can’t seem to control. But knowing the Pinoy’s resiliency and talent to sway like the bamboo with the battling winds, it’ll take much, much more than what we are presently going through to break us.

Mabuhay!!! Be proud to be a Filipino.

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