AFTER inflation spiked to 4.9 percent last month, stakeholders in the energy sector are reassessing how they could keep up in this challenging time when consumers are very cautious in their spending.
Inflation affects the overall buying power of the consumer.
In its view, Pilipinas Shell Petroleum Corp., the country’s second largest oil firm with a market share of 15.5 percent at end-June this year, said the disposable income of the consumer has not changed. As such, in a basket of goods with increasing prices, customers will prioritize expenses according to their needs, especially during pandemic.
“Shell, for its part, recognizes all those factors. Hence, we make sure that the overall products and services offered are of great value to our customers,” the company replied via e-mail when sought for comment.
Among these include “exciting promotions to fully stretch the wallets of our customers; on-demand deliveries; and expansion of our products in convenience retail, Shell Select, vehicle servicing and other services to cover for the majority of our customers needs via our mobility stations.”
Shell assured the public that its fuel products bring extra kilometers for its customers. “We further assure that our customers get the right quantity of fuel every time they load up,” a Shell official said.
Demand for petroleum products plunges whenever strict community quarantine is imposed, thus fuel sales are affected. And when sales plunge, oil firms have to think out of the box to cope up during difficult times.
For instance, Petron Corporation offers discounts of P3 per liter for gas and P2 per liter for diesel to all vaccinated customers at select stations nationwide. Customers can also avail themselves of free anti-bacterial treatment for their vehicle for a minimum fuel purchase.
“We want to offer more value for their hard-earned money,” commented Petron president Ramon Ang.
Apart from offering discounts, Phoenix Petroleum wants to make sure that customers feel safe when they gas up in all of its 680 stations.
Already 97 percent of its entire workforce will get vaccinated this month, with 60 percent being fully vaccinated. The third largest oil company in the country also said that there are 15 service stations served by fully vaccinated staff.
“As employers of a nationwide workforce of 5,000, we have the responsibility to educate and share accurate and understandable information on the proven facts and benefits of vaccines,” said Phoenix’s Corporate Health, Safety and Environment head Ronaldo Ulep.
Phoenix recognized that sustained increases in prices might dampen consumer sentiment and eventually demand, especially if mobility continues to be restricted by the rising Covid cases and delays in vaccinating the population.
“That’s why, apart from all promotional discounts, we want to convey a message that we support the government and the nationwide Covid-19 response in any way we can,” he added.
Eastern Petroleum Corp. noted that with intense competition, oil companies also offer added services like putting up retail outlets to add to their bottom line.
“Cost cutting was similarly resorted to just like other retail businesses. Fair and competitive pricing will always be the mantra of the industry, otherwise motorist will always have other options,” said company chairman Fer Martinez in a text message.
Hopefully, Martinez said, the lifting of the quarantine and implementation of “granular lockdowns” would help improve mobility and business activity, and in turn, fuel demand.
Power firms, meanwhile, had to cut on expenses as well while continuing to invest in the health of its workforce.
“Costs, in general, trend in line with inflation, and the pandemic is no exception. Protocols that we have put in place like regular testing, facility quarantines and vaccination programs, make it even more challenging. We’re navigating this difficult situation by ensuring that our expenditures are focused on what really matters,” said Aboitiz Power Corp. president Emmanuel Rubio in a text message.
Rubio noted the attention given to the safety of its team members, for instance. “We make sure that we manage issues associated with working from home, and also provide all the necessary support for our field and on-site teams. We also have various efficiency improvement mechanisms in place, which allow us to optimize our limited resources, streamline our processes, and as a result, deliver more with less.”
The Manila Electric Company (Meralco) is also affected but rates, it pointed out, are mitigated by the supply deals that underwent competitive biddings.
“With Meralco’s 2019 CSPs (Competitive Selection Process), however, the fuel price and FOREX (foreign exchange) risk were transferred to the suppliers, aside from the outage risk. Hence, 1,700 megawatts of capacity contracted by Meralco are no longer affected by fuel and FOREX movements, protecting Meralco consumers.
“As a result, even with the recent fuel price increases and FOREX depreciation, Meralco rates today are lower than in 2019 or even in 2018,” said Meralco spokesman Joe Zaldarriaga.
Early predictions for the next monthly inflation rate point to more than 5 percent. Industry stakeholders said the direction is to continue doing what they do best—to meet customer needs while staying afloat until the crisis passes.