Let Bayan, Piston import their own oil

These leftist groups are getting tiresome. We all know they are just using oil prices as a propaganda point. What they really want to do is bring down government. They know that local oil prices merely reflect world trends… and that we are too small a market to influence that. All the noise they are generating are confusing the ordinary citizen.

My Facebook friend Robert Young Jr. has a good idea: why not let Bayan import its own oil. In fact, why not let Piston join Bayan in this endeavor. Just so they don’t look like fools out there not knowing how to do business, let Ronnie Concepcion provide the business know how. This will give all these oil price know-it-alls a first hand experience of what it takes to bring oil into this market.

Ronnie Concepcion does not share the anarchic goals of the left but his Price Watch can be more credible when the claim is made that local oil prices are P7 per liter over priced if he is in the market himself. Nothing will make the Big 3 oil companies honest than competition from public service oriented groups like the leftists and Ronnie C working together importing oil. That would be market competition at work.

Actually, we need not be too worried about rising oil prices in the next few months. The summer months traditionally bring down demand for oil in the northern developed countries. While demand for gasoline typically increases in the summer months in the United States, the struggling economy and high unemployment rates probably will dampen that demand this year.

As BusinessWeek reports, the April futures contract on the New York Mercantile Exchange (NYMEX) for West Texas Intermediate crude oil, after topping $83 on Mar. 17, settled $1.57 lower, at $80.63 a barrel, on Mar. 19. Some analysts think the price should be closer to $50 to $55 a barrel. But it will likely stay at current levels if Saudi Arabia can help it.

Saudi Arabia has put on production a new large oil field only to bring down total production shortly thereafter because the world demand was still largely muted. Saudi Arabia is comfortable at current prices of between $75 to $83 and will play the role of moderating supply and prices as other OPEC members cheat on their production quotas by producing a little more.

Analysts predict that any increase in prices, if any, will be slow. BusinessWeek reports that some energy analysts are convinced that oil prices are grossly inflated, fueled more by speculative money than actual demand, despite the modest economic recovery taking place. Then again, there are also some analysts who say speculation is more about the speed at which prices move than their actual levels: It causes prices to move faster in the direction they were already going, both on the upside and the downside.

Demand for oil these past months have increased from China and India. Saudi Arabia has actually exported more oil to China in the past year than to the United States. It is demand from the emerging markets that’s keeping prices up. It is anticipation of increased demand from countries like India and China that’s making some analysts predict oil prices “will be comfortably above $100 a barrel for more than a day at a time sometime in 2011, once the world realizes there’s not as much spare production capacity as it now believes.”

Roughly half of global oil consumption is by emerging countries such as China, India, and Brazil, where demand will continue to grow. Although global oil demand won’t climb as fast as it did from the mid-1970s to 2005, there still isn’t enough supply available to prevent oil prices from rising from 2011 to 2013.

For now, BusinessWeek quotes Rehan Rashid, head of energy and natural resources research at FBR Capital Markets (FBCM), who says he’s comfortable with the current 12-month futures price range on NYMEX of $75 to $80 a barrel. But even Rashid thinks the economic recovery, to the extent that it fulfills people’s expectations, will be much less energy-intensive than prior ones. Growth in energy demand will also be hampered by the push by governments and private industry for greater energy efficiency, he adds.

National Grid

I am wondering why an official release from Henry Sy Jr. is only claiming to have bought out Ricky Razon from the National Grid at $350 million. Yet, this same published story says “The concession contract amount to $3.95 billion, 25 percent of which, or $987.5 million was paid on commencement date and the balance on semi-annual installments for 20 years.” That’s a figure closer to the $800-million figure that my highly authoritative source told me, and reconfirmed to me after the Sy release.

I have also been informed that the net income of the National Grid is P17 billion or $400 million for 2009 and is expected to earn P20 billion or $450 million for 2010. With such kind of earnings, I think Ricky Razon should not be insulted with the amount reported in the press release.

Curiously, our energy reporter, Donnabella Gatdula told me that her source at Monte Oro (Ricky Razon’s company) told her the cheque that was written to them by the Henry Sy Jr. group amounts to $590 million. I wonder why there are these reported discrepancies in the actual figure.

As for the claim that San Miguel is not involved because Mr. Sy is capable of raising large sums on his own, the claim is probably more legal than real. When Mr. Sy made a bid of P300 a share for Meralco which forced PLDT to match it, a high San Miguel official kidded me at a social function that my principals (the Lopezes) have not thanked him yet for bringing the Meralco price up. I think I told him they already thanked Mr. Sy. Come to think of it, was he saying that’s the wrong party to thank?

Expensive shoes

On the saga of the “malfunctioning” expensive pair of shoes, I just got word that it had been resolved. As it turned out, the shoes are seven years old and not purchased in 2009, not from the store anyway, as initially claimed. The name brand store was unable to find a record of the shoe purchase under the name of the complainant in their local and worldwide database. Neither could they find any record in another name supplied by the complainant… does this suggest the pair was bought second hand?

The store’s head office informed the local store that the shoes in question are from the 2003 collection, phased out more than six years ago, making it impossible to replace the offending pair. In any case, I agree with the store’s position that given the age of the shoes, they could no longer be considered defective. That’s called wear and tear. But they offered to have the pair repaired free of charge, anyway.

Well… no one can expect shoes to last forever… even very expensive pairs. For the price the complainant claims he paid, he could have bought at least three pairs of an also pretty respectable brand that I use… one pair of which I have been using for over seven years with no sole malfunction. Buy for utility and comfort… not status symbol!

Bunjee-jumping

Robin Tong sent this one.

Two friends were exchanging notes about items on their respective “Bucket Lists” when one noticed the other didn’t have “go bunjee-jumping” on it.

”Why don’t you want to try it? I heard it gives you a rush unlike any other!”

The friend replies, “No way, man. I was born because of a broken rubber and I certainly don’t want to die because of one again!”

Boo Chanco’s e-mail address is [email protected]. This and some past columns can also be viewed at www.boochanco.com