Philippine Motoring Industry year end report card 2010 Part Two
by Tito F. Hermoso
Deregulate or die
Can any one beat the oil majors? Or should the question be, can anyone beat the independents? No further proof of the success of the Oil Deregulation Act can beat the way independents oil retailers outdo the big oil majors in dropping prices even lower and quicker. Naturally, the consuming public, spoiled for choice, would also cry when the same free market principles went the other way round as international oil prices cause a spike in fuel prices resulting in shortages due to clumsy government attempts like E.O. 839. For most of the year, the nimble of the independents were even able to field specialty fuels like Hi-test unleaded for racing and E-85 Bio-ethanol. Privately run toll expressways can only look with envy at the ease the public accepts frequent oil company price adjustments.
Subsidize or die
Improvements in oil formulation have allowed many car companies to extend their service intervals. Widespread distribution of E-10 Bio-ethanol have exposed the limited capacity of local refineries to make bio-fuels. Hence the clamor for a subsidy or tariff protection from the exports of most efficient maker of Bio-ethanol, Brazil. And also from the subsidized exports of US ethanol refined from corn. The unfortunate consequence of this is that US subsidies of ethanol production of corn has raised food prices. Brazil, using only the by-product of sugar cane production, has felt no adverse effect on food prices. In fact, the rising food prices, including that of sugar, is pushing Philippine cane sugar producers to sell production for food rather than for ethanol production.
Clean diesel to die for
No longer is 100 octane reserved for Blaze unleaded. Short of introducing clean Euro IV diesel to the Philippines - which entails billion dollar investment in retrofitting existing refineries or import finished fuel from Singapore - Caltex with its Techron D, Shell with its V-Power Diesel and Petron with its Turbo Diesel - finally introduced a premium diesel which, though dearer, claims to clean exhaust better and makes for a better fuel for all of the modern CRDi turbo diesels running around. The down side to this is that since this is a premium priced product in limited distribution at the time of this writing, the best beneficiaries of the clean fuel - the public transport sector running old dirty diesel engines - won't care for its benefit. Which will mean the continuance of the publicly condoned highway robbery done by some Local Government roadside Anti-smoke belching units who "test" your exhaust to force it to fail.
Dissipate, Natural gas?
Senator Juan Ponce Enrile led the Senate to review the pricing policy on Natural Gas as its scarcity in the local market is causing the private sector to ask uncomfortable questions. With the barely tapped Malampaya gas fields within our territory, the country should have been extending the pipeline network and expanding the distribution forecourts as NG is a clean source of energy.
North Harbor or bust
Sometime during the year, a trial balloon calling for the transfer of the Pandacan Oil Depot to North Harbor was floated. What the proposal did not take into consideration was the cost of digging a pipe line across the Pasig River and smack into prime property in Manila. The current set up of EU-compliant fuel tanker trucks and oil tankers shuttling between Batangas or Bataan and Pandacan may still be the more affordable solution even if a pipeline, per se is cheaper - if only right of way acquisition is cheap.
Bury that Pipeline
But what was more jarring was the oil leaks caused by the vibrations of the foundation of the SLEx Magallanes interchange since it was built on top of the 117km FPIC pipeline. What we have taken for granted as one of the best all weather cost effective means of transporting fuel 24/7 was suddenly halted because of the demand of legislators to check the entire pipe line. Shortages were the sad result of this.
Lucky not to have a sub-prime market and big funds sloshing around in investment banks, the ruddy good health of the financial sector helped prod the ruddy good health of the automotive sector. Thanks to the culling of weak banks and property developers during the 1997 Asian Financial Crisis. This time local banks opened the taps to consumer finance creating auto sales bonanzas like the BPI Auto Madness and BDO Wheels and Deals. Finance spread to 2-wheelers, encouraging long suffering commuters to move to the freedom of self-drive personal motoring. On the infrastructure front, local banks are now seeing the wisdom of financing expressways, mostly in urban areas.
Playing on insecurity
What was a good idea of bundling comprehensive motoring insurance polices from Insurance Commission accredited Non-life car insurance companies, turned into a PR fiasco as the other insurance companies left out of the accreditation process caused a groundswell of protests and accusations of monopoly bullying. This worthwhile idea remains stalled. By far the most popular and contentious phrase in the insurance policy this year was "Acts of God" as extensive flood damage by Ondoy and Pepeng inflicted untold grief on the Middle Class's fleet of precious cars.
Circuit racing remained at a steady pace as most running series managed to eke a minimum field of participants and keep to the promised racing calendar. As some sponsors dropped out, a few new ones spotted an opportunity and went for it. Recently, a relatively new tire brand - Starfire - distributed by Sammy Luison of Concept One - filled in the rubber boots of the previous sponsor and came away with enhanced respect from veteran racers who were used to more expensive brands. Goodyear, on the other hand, continued its steady support for racing and drifting even after it closed its 40 year old manufacturing facility.
Though the Subic International "Pocholo Ramirez Raceway" is no more, the best news for most racing fans was the expansion of the Clark Speedway operated by Johnny Tan. Moreover, it has easy access to airport, hotel and restaurant amenities of Clark. Being next to the SCTEx, it is a pleasant drive away from the Metro. Johnny Tan's larger and more sophisticated BRC [Batangas Racing Circuit] in Rosario is still quite a drive away despite the easier access through the STAR's new San Jose-Ibaan exit.
Drifting continues to gain a wide audience. Its an easy to watch spectacle and it has the least barriers to entry whether participant, sponsor, venue locator or spectator. Though technically not a sport as there is no "race" against the clock, it is visually exciting and doesn't take much to understand. Goodyear kept its sponsorship of regional drifting.
Keep right, keep the faith
Though our society places little value on safety, the proliferation of reflective apparel on some cyclists and various kinds of fluorescent mesh vests, reflective tunics and jackets on road construction and security personnel is now becoming the rule rather than the exception. NLEx patrol vehicles now sport an EU-approved shade of yellow and their new Mitsubishi Strada lane managers have big rear mounted LED matrix signs reminding Filipino drivers about their most common lane infraction - KEEP RIGHT.
Private Sector Grade Rating : Started early in the year with an A, and keeping steady till year end.
Catch Part Three next week: our report card on the Auto Industry itself.