Elephants co-operate, ants continue to suffer ?

Atobe SG

With the announced co-operation between EXXON-Mobil and NTUC FAIRPRICE will Singaporeans benefit from such a mutually supporting relationship between two giants in their area of specialization ?

EXXON-Mobil will build the petrol stations, and own the petroleum products brands that is sold; while NTUC Fairprice will operate the sale of petrol and the convenience store.

EXXON-Mobile provide the capital to build and deliver the oil and petroleum products, while NTUC Fairprice provide the labor and expertise in providing the consumer products to stock the convenience stores.

Each of the giant will save half the costs in earning their share of the respective revenues.

Where does it leave the Singapore motorists and consumers ?

Will we see lower then normal petrol and oil products prices ?

Or will each of the giant player get a bigger bumper profit from the savings and additional economies of scale of their operation ?

http://www.exxonmobil.com.sg/AP-English/News/sg_news_retailalliance_130905.asp

BillyBong SG

While EXXON-Mobil may be a no. 1 on the fortune 500 charts as of 2004 latest rankings, there isn't any suggestion here to say they will have the same impact, not least with the regulatory controls by our gahmen.

At the moment, Shell and SPC are competiting station for station to get the consumer sales volume. With multiple outlets throughout SG, they are the primary heavyweights slugging out while the rest feast on the scraps.

But with this new contract with NTUC, i see Esso-mobil either consolidating their position in SG mkt or planning to buy off caltex and turn this into a 3-pronged tri-nopoly. The signs are definitely there.

As for Fairprice cornering the market, i'm doubtful. Convenience stalls at petrol stations was never really much of a draw to customers anyway. Shell's supermart countered this by going 24h in some outlets. The tiger shops never really took off and are in serious need of a face-lift. SPC adopted a transparent concept similar to Breadtalk, no doubt to attract drivers by 'showcasing everything' (literally) in their shop and along the outside.

Unless Fairprice can provide some value-add to this trend, i see them falling into the same trap as the previous brands. The only advantage is that being a larger corporation, they can absorb losses better and still project some measure of growth.

Nothing to worry abt....except the same stale variety Fairprice will offer, possibly at better rates or higher discounts.

ndsef SG

Seriously, what is there to gain for us as consumers Question Rolling Eyes If Fairprice is going to sell almost similar items at the petrol kiosk, won't we end up having a jam and causing delays for motorists who are there to just top up petrol?

BillyBong SG

Fairprice is not attempting to turn the petrol stations into an out and out supermarket. They have just obtained the rights to open a 'mobil-mart' with the name fairprice on it. Likely to sell the same things at better prices.

However your point is interesting, depending on the size of the mart allocated. They might build on the supermarket idea and go one better.

Lowclassman SG

Why BP withdraw from Singapore?

Why SPC become stronger?

Why after BP withdrawn from Sg and COE price started to decline so rapidly. Surely, someone was behind to manipulate and wanted to get a biiger pie of cake. Simple logic. Dirty game.

dragg SG

i didnt know of anything that is cheaper than it used to be. prices only go in one direction - UP!!!!

robertteh SG

President Bush similarly becomes less interested in listening to human right problems like tweaking of constitutions or election processes to perpetuate one-party rule, use of defamation suits to overwhelm political oppositions, self-paying of ministers’ highest salary and bonus rewards or lack of rights of accused in criminal investigation procedures etc now because he is happily cooperating on Terrorism, FTA etc with our leaders. You scratch my back I scratch yours.

sgdiehard SG

You are right on. Sizes of petro kiosks in singapore can only accommodate convenient stores, not super market. You need the space for merchandize and car parks, and walkway in between.

Products in convenient stores are often available only small quantities, available 24 hrs...and that means higher prices. usually when we pick up a few items out of convenience, we don't check prices. Watch out next time.

What puzzled me is that prices of new kiosks or service stations have been over 20 millions for 30 yrs lease and oil companies justified such high biddings on higher sales of oil products. How does NTUC help in repaying such high leasing prices?

Higher sales in NTUC, resulting in traffic jams, on the forecourt and at the cashiers, is definitely at the expense of petrol sales, is NTUC supermark business more profitable than petrol business???

sgdiehard SG

BP has never been committed to singapore. As the colonial master of singapore, they never committed in a refinery like Shell, Mobil, Exxon, (except the small kettle at pasir panjang which was limited in lease) and finally they had to share SRC with SPC and Caltex, and now they even pulled out from this. They moved their management HQ out of singapore to KL many times. It is not surprising that they are out now completely. Take note, they also do not own one single service station in Hong Kong, where they were also the colonial master till 1997!! Singapore market too small?? not true when you look at Shell who announced upgrading their crackers in Bukom. I can only conclude that the brits are only good at taking as more out of their colonies than anybody.

BP looked around for a buyer of their retail network in singapore and malaysia for a long time! I am glad it was SPC who bought over and not another MNC paying high prices to BP only to recover it from their customers later.
It may be a choice of two evils but SPC is a better evil.

If you notice, even before SPC took over all the BP retail network, SPC oredi started giving discounts, and when they took over, discount war (not free gift war) intensified, especially in area where there are SPC stations. During this period of crude price escalation, I believe SPC actually restrained the market from passing all the increases directly to the customers, plus increased margins and increase tax. I now use 95 instead of 98, still I have to pay over 70$ for a full tank, over $80 if no discount, over $100 if crude hits $100 per barrel and still no discount, I used to pay only around $55.

ExxonMobil and Caltex, are always the first to increase prices! is it coincidental that they are american? SPC, so far so good, they need to prove themselves what kind of suppliers they are in the long run. Shell has retained their reputation as a reliable oil supplier in singapore. For now, I support SPC to support the discount war.

What is the link between BP's withdrawal from the mkt and the decline in COE prices?? pls enlighten. Thanks.

Atobe SG

BP is not part of the British Establishment.

It is not government owned, like our SPC.

SPC was only a small player in Singapore, and since its creation, it operated no more then 5 petrol stations throughout Singapore.

With the withdrawal of BP from the Singapore scene, it allowed SPC to expand its presence by taking over all the strategic locations of BP stations throughout Singapore.

This has allowed SPC to gain over 30 petrol station sites in strategically located points that were previously unobtainable due to the tight land space available to operate a petrol station.

In Malaysia, it seems that the BP operation has been taken over by the State owned Petronas.

Is it possible that the Government will "influence" the COE prices to increase the car population to benefit SPC alone ?

This is not likely, unless one look at the larger amount to be collected through ERP with more cars running on the road.

Cash is flowing from our cash cards into the Government Treasury, each time a car passes under the ERP gantry.

The ringing and electronic humming sound in the Government Treasury is louder than that in any Las Vegas Casino.

It is jackpot every day for the Government Treasury.

With this EXXON-Mobil and NTUC-Fairprice tie up, now on a nation-wide scale, it will allow both sides to benefit from higher margins.

EXXON-Mobil will benefit from the operation of the Convenience stores that will have products available at lower costs, and definitely sold at higher margins than found at Fairprice Superstores.

NTUC-Fairprice will have a finger in the profits of a Petroleum Operator, an area which NTUC-Fairprice is presently unfamiliar, but will soon accumulate enough experience and expertise to achieve its declared goal of operating its own Petroleum Brand.