Pummeled by rising public indignation and creeping market loss, branded fuel stations in the City of Tagbilaran lowered their pump prices by an average of P4 for gasoline and diesel products.
The reduction on fuel prices followed after both the Sangguniang Panlalawigan and Sangguniang Panlungsod conducted separate investigations on why fuel prices in the province, particularly in the city are excessively high compared to other provinces.
Reacting to this sudden reduction of fuel prices by the branded fuel stations, motorists hope these discounted prices will stay on for good and not only for a few weeks just to “silence” the public clamor.
Petron stations started dropping their fuel products by P4 on Friday, January 15, 2021, with Chevron, Shell, and other branded stations expected to follow in the next three days.
Petron station across Plaza Rizal posted pump prices per liter for diesel – P42.79 down from P46.96, Silver brand – P55.34 lower from P58.35, and Platinum – P56.34 dropped from P59.21.
Reports reaching the Chronicle showed that diesel prices in independent stations in Dauis ranged from P37/liter while unleaded gasoline was priced at P47.80.
With a gaping difference of as much as P10 per liter offered by “white” and independent stations, the main offices of the dominant “big three” oil companies belatedly heeded the pleas of their distributors in Bohol to at least offer a competitive price margin to match the cheap prices of its competitors.
CORPORATE BUREAUCRACY
Petron considered the dominant market player in the fuel market was likely to initiate a price reduction as its corporate structure can easily adapt to changing market price variations with decisions handed down at the national level.
Unlike Chevron, an American multinational energy corporation that owns the petroleum brand Caltex and Shell under Royal Dutch Shell, a British-Dutch multinational company, the chain of command goes beyond the country’s borders delaying crucial decisions on price adjustments.
HIGHER OPERATING STANDARDS
Industry insiders told the Chronicle that the lowered P4.00 price difference between the pump prices offered by “white” and independent stations is reasonable considering the operating cost, financial capital, stringent government regulations, and corporate contract obligations of the operators.
According to local branded station operators in the city, pricing their products at par with other stations is dependent on the standards set by the brands they carry.
Parent companies strictly enforce and monitor operating standards of fuel stations modeled after the United States and the European standards with permits secured annually and “shortcuts not accepted.”
Failure to abide by these standards will open operators to possible lawsuits and de-branding with their parent companies sensitive to breaches in safety standards that would ruin their reputations in the world market.
HIGH OPERATING COSTS
Rent played a major factor in the pricing of fuel in the city vis-a-vis fuel stations located in neighboring towns like Dauis and Panglao with high rental rates of land in Tagbilaran City. The majority of independent stations are located in nearby barangays due to lower rental rates.
The Chronicle learned that major oil companies are subsidizing up to a certain limit the operations of their retail outlets in municipalities to sustain their hold on a small segment of the fuel market.
WEAK REGULATORY SUPERVISION
Also, the proliferation of retail outlets without the required Certificate of Compliance (COC) secured from the Oil Industry Management Bureau has risen since some Local Government Units (LGUs) only require a mayor’s permit or business permit while ignoring to check the distributor/supplier/dealer’s agreement of the retail outlet.
The type of fuel sold greatly affects the pump price of fuel stations with branded stations strictly monitored to ascertain that fuel products are 100% supplied by their respective brands. Samples are taken monthly by third-party inspectors to ensure branded fuel integrity which should be strictly 10% ethanol blend for gasoline and B2 biodiesel with additives to differentiate brands.
However, unscrupulous dealers sell banned commercial/industrial grade fuel which is cheaper due to its lower quality since these are used for heavy machinery, aviation, and marine transportation.
STRICT MONITORING
In 2015, the sale of commercial-grade fuel in retail stations in Cebu was so widespread driving pump prices at P10-12/liter cheaper than in Bohol but was halted after a massive round-up of retail stations violating provisions of RA 8479 known as the Downstream Oil Industry Deregulation Act of 1998.
As of January 5, 2021, average pump prices in Cebu for diesel – P41.88, unleaded – P53.34 and premium P55.10 cheaper by P3.00/liter compared to Bohol pump prices.
Branded stations are strictly monitored to ascertain that fuel products are 100% supplied by their respective brands. Samples are taken monthly by third-party inspectors to ensure branded fuel integrity which should be strictly 10% ethanol blend for gasoline and B2 biodiesel with additives to differentiate brands.
Transportation cost and the presence of import terminals contributed to the lower prices of fuels in Cebu, Dumaguete, Davao, and Cagayan de Oro City in comparison to Bohol where the present fuel depot has a limited capacity and requires several transfers to four barges per week compared to one barge good for two months supply stored in import terminals.
Taxes imposed under RA 10963 known as the Tax Reform for Acceleration and Inclusion Act increased the tax rates for gasoline from P4.35/liter to P10.00/liter and for diesel at zero to P6.00/liter.
Unless the government agencies – Bureau of Internal Revenue (BIR), Bureau of Customs (BOC) and the LGU’s move to implement relevant laws governing the business of retailing liquid fuels, price differentials will continue to confuse the Boholano consumers with cunning businessmen driving out of business legitimate fuel retailers at the losing end.
INVESTIGATION ON GOING
Provincial Board Member Auxtero said the provincial lawmakers do not buy the idea that the operating cost is the main reason behind the huge difference in fuel prices, comparing the prices in Ubay gasoline stations and in Tagbilaran City.
The Sangguniang Panlalawigan will continue its probe, assured Vice Gov. Rene Relampagos, presiding officer of the provincial law making body.
For its part, the Sangguniang Panlungsod is likewise conducting a separate fact finding investigation on the real reasons behind this exorbitant prices of fuel in city gas stations.
“We were not satisfied with the explanation of the representatives of the “Big 3″ who attended our session last week,” according to Vice Mayor Jose Antonio Veloso.
The probe will be pursued by the city SP committee on energy and public utilities, the vice mayor said. (Chito M. Visarra)