Why are we paying more for high octane fuel?

Finally the Department of Justice will be looking into the books of the oil companies to find out if any unfair market practices could be filed against them. A few days ago Cebu Rep. Eduardo Gullas exposed the reality that the two oil refiners, Pilipinas Shell Petroleum Corp. and Petron Corp., raked in nearly P70 billion in combined net profits since the passage of the Oil Deregulation Law in 1998. Rep. Gullas pointed to Shell posting P33.59 billion in cumulative net profits, and Petron bagging P35.18 billion for the same period. Let me point out clearly that I don’t blame the Oil Deregulation Law on this… after all profits are part and parcel of any private company.

But when oil companies rake in humungous profits at the expense of our economy… that should open them to closer scrutiny by government agencies like the DOJ or the Bureau of Internal Revenue (BIR). As Rep. Gullas pointed out, “There is also no question that as a result of soaring world oil prices, industry players are enjoying enormous pricing power that has enabled them to pump up their profits; consumers are now extremely vulnerable to potential pricing abuses.”

The DOJ investigation on behalf of the Department of Energy’s Task Force is led by Justice Undersecretary Jose Vicente Salazar who I know is a person of unquestioned probity and high integrity and a man who gets things done, which is rare in government these days. Usec. Salazar says the government is mandated under the Oil Deregulation Law to prosecute those engaging in unfair market practices and if there are violations of law, the government will definitely prosecute. So the big question to ask is, where should they start looking? I just hope that the DOJ has the time to scrutinize all the books of the oil companies within our lifetime! This is why we must help the DOJ in anyway we can.

Call it a God-sent coincidence that I got an e-mail from a Mr. Fidel Jugo who apparently went on his own research which he calls “Fuel Choices in the Philippines: A Necessary Review to Lower Fuel Pump Prices.” Actually what he sent me was a PowerPoint presentation. For his research, Mr. Jugo went to the US last May and looked at gasoline pumps there and compared them to those in the Philippines. Looking at the photos that he took, you will immediately notice that the octane ratings here in the Philippines are totally different from those in the US.

Look at any pump in any gas station, you will read that our octane ratings are 93, 95 and 96, while in US, gasoline pumps are 91, 89 and 87. So Mr. Jugo brings us the poignant question, “What are octane ratings?”  Mr. Jugo says that octane rating is a measure of the auto ignition (engine knock) resistance of gasoline and other fuels used in spark-ignition internal combustion engines. It is a measure of the anti-detonation of gasoline or fuel and nothing else! The higher the octane number, the more resistant it is to engine knocking. Come to think of it Mr. Jugo is right!

I do remember distinctly that this was a nagging problem during the 70s, the 80s and most of the 90s when cars had carburetors, which were then quite common in cars. But this is the new millennium and car engines have shed those crummy carburetors, dropping them in favor of fuel injection engines, which are computer-controlled. So if you looked at the manufacturers’ specifications on cars like the Toyota Corolla, it’s okay to use 90 octane and you won’t experience any knocking at all. Unfortunately I don’t have enough space to print all the octane requirements of all cars.

What the oil companies have been doing in the past 20 years has taken the Filipino motorists for a ride, giving them all the hoopla and the B-S that octane rating equates to more power and better mileage. Hence Pinoy motorists are paying extra for gasoline with higher octane rating than their engine requires. Now this is something that our friends in the DOJ ought to look into and let the oil companies explain why we’re being taken for a ride.

Meanwhile, Mr. Jugo suggests that we should do away with all our 95 Octane Vortex Silver or the 95 Octane Vortex Gold, the 95 Octane XCS Plus, the 93+ Octane XTRA or the highest octane of all the 96 Blaze because in the US these are the octane ratings for sports or even racing cars! Yes, Sunoco Oil sells 93 Octane gasoline for racing cars, Porsches and Ferraris!

Indeed, if we want to reduce gasoline pump prices, the oil companies should only sell 87, 89 and 91 octane-rated fuel. That’s not all, the cetane level of diesel fuel (that’s the octane rating for diesel) is between 45 and 50 Cetane when most of our diesel engines can run only with 40 Cetane. So why are we fed higher cetane for our diesel engine jeepneys? What can I say, but Mr. Jugo hit right on the nail, which should be of special interest to the DOJ.

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For e-mail responses to this article, write to [email protected]. Bobit Avila’s columns can also be accessed through www.philstar.com. He also hosts a weekly talkshow, “Straight from the Sky,” shown every Monday, 8 p.m., only in Metro Cebu on Channel 15 of SkyCable.