As a respected businessman-industrialist and business leader, Raul T. Concepcion deserves nothing less than a standing ovation for his unwavering commitment to consumer rights especially where domestic oil product pricing is concerned.
During my time as a Shell executive, we would meet with Raul being the founder, chairman and most active member (not necessarily in that order of importance) of the Consumer Oil Price Watch to reconcile what he perceived were discrepancies in the pump prices of petroleum products sold by the so-called “Big Three.”
Even before the deregulation of the oil industry, Raul was actively involved in helping craft the bill which would release the industry from the clutches of a socialized pricing system under an Oil Price Stabilization Fund. He, after all, knew the follies of artificial pricing and too much government interventions.
I would like to think that over the years of working together, Raul had become a sort of conscience, even our reality check, of how consumers and business were struggling to cope with sudden upward changes in petroleum pump prices.
Full-page ads
When I retired from Shell, any attention to the developments in the oil industry became just a little above cursory as I pursued other interests. However, any news that concerned the industry, especially if it seemed likely to turn into an issue, would still draw my attention. Blame it for being an oilman for almost four decades.
And so, when the COPW recently published several full page ads urging Congress to immediately amend the oil deregulation law, it somehow confirmed several early warnings bells that had been jangling at my consciousness the past few months.
Questionable behavior
Reading through the ad, one cannot miss the building frustration in Raul’s demeanor, not just with regards the behavior of the big oil companies, with Shell being singled out in many instances, but also the energy department and the DOE-DOJ Task Force in particular.
Raul accuses the task force, which was formed with the passage of the Oil Deregulation Law to monitor the fairness of any change in the pump prices of petroleum products, of being remiss in its mandate to protect the consuming public.
He also points a finger at the energy department for being negligent and apathetic with regards its more encompassing role of serving and protecting the public interest, more so during periods when crude oil prices were on the rise.
Consumer helplessness
In the COPW’s call for amendments to the Oil Deregulation Law, the citizen watchdog organization stated that the consumer has become “totally defenseless against indiscriminate price hikes.”
In particular, the COPW manifesto called for refinements to the DOE-DOJ Task Force’s mandate to strengthen its monitoring role, including getting the actual volume and value of oil shipments that arrive, and of informing the public whether pump price changes of petroleum products are “justified” and “fair.”
Lastly, to put more teeth to the law, the COPW wants Congress to “impose appropriate sanctions” on the task force should they not comply with their mandated duties.
Feedback
At the bottom box, Raul asks concerned consumers to give their feedback via SMS on the proposed law amendments by indicating “agree” or “disagree.” As a consumer with whatever little insights in the oil business, I would like to contribute some few comments on Raul’s campaign instead of just saying “agree” or “disagree.”
On forward buying
COPW has accused Shell and Petron of being remiss when it did not buy forward contracts of crude oil early on in the year, and therefore missed out on possible big price reductions that could have benefitted the public.
As a businessman, I’m sure that Raul knows that buying forward contracts have their risks. Well and good for the business, and hopefully the consumer, if there had been a windfall savings should prices increase as speculated. However, if prices slid down, this would have meant potentially huge losses – and an irate public since the loss had to be passed on to them! On speculative decisions like forward buying, all parties must bear the consequences, both good and bad, but the consumers may not agree.
On timing and basis for price adjustments
On the issue of timing and basis of price adjustments, Shell and Petron being refiners as well as finished product importers may very well choose to adjust their prices based on crude oil prices or prices of refined products as indicated by Means of Platts Singapore (MOPS). Both, of course, would argue that it is a free market after all.
It is this issue that puts to test the public sensitivity and conscience of Shell and Petron. Both can be opportunistic players, i.e., switching pricing benchmarks between MOPS and crude as a basis for increasing local petroleum product prices wherever it is more convenient, and therefore maximizing on profit taking. Fine from a purely and strictly business point of view as the oil companies’ bottom line improves. But what about the consumers? Should they not benefit too?
For Shell, there is even the matter of compliance to the law that explicitly states that it should open its shareholdings in the refinery to the public so that consumers who opt to be shareholders may also benefit from the profit that accrues from operating the facility. To this day, Shell has managed to influence DOE not to implement this specific provision of the Oil Deregulation Law.
Becoming complacent and less transparent
There is scope for more transparency by the two big oil companies. I have always believed that the deregulation of the oil industry, or of any business sector for that matter, is a matter of trust that comes with responsibilities to the consumer, the community, and the nation.
Needless to say, if the law is abused, there is pressure to have it changed and improved. In some cases, with excessive display of recklessness, a law may even be revoked.
Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at reydgamboa@yahoo.com. For a compilation of previous articles, visit www.BizlinksPhilippines.net.