A Study on the Liquefied Petroleum Gas in the Philippines

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A Study on the Liquefied Petroleum Gas in the Philippines

In Partial Fulfillment and Requirement
In Intermediate Microeconomics

Submitted to:

Prof. Rulina Viloria

Submitted by:

Archeeno S. Diaz
September 5, 2011

I. Background and Historical Account of the Industry

A. the industry’s formation, personalities involved and significant events

The World

Under the direction of Dr. Walter Snelling, the U.S. Bureau of Mines investigated gasoline to see why it evaporated so fast and discovered that the evaporating gases were propane, butane, and other light hydrocarbons. Dr. Snelling built a still that could separate the gasoline into its liquid and gaseous components and sold his propane patent and thus LPG was born.

Propane gas was cooking food in the home. The first car powered by propane ran in 1913. By 1915 people were using propane in torches to cut through metal. LPG has been used as a transportation fuel, mainly in heavy trucks and forklift vehicles, around the world for more than 60 years.

In the Philippines

Standard Oil Company of New Jersey merges its operations in the eastern hemisphere with Socony-Vacuum, which is renamed Standard Vacuum Oil Company, or Stanvac. 

Shell products, including Shellane LPG were being sold to more areas in the Philippines through installations and depots set up in strategic points throughout the country.

Caltex buil the first petroleum refinery.

Stanvac begins construction of a Bataan refinery, later grouped under Bataan Refining Corporation. 

Filoil, first Filipino-owned oil refinery, is created.

Esso Standard Eastern takes over Stanvac.

-1971 (R. A. 6173, the “Oil Industry Commission.”)

Regulation of the oil industry and to ensurance for adequate supply of petroleum products at reasonable prices started. The first attempt by Congress to deregulate the oil industry was in the passage of Republic Act No. 8180. This law was, however, struck down as unconstitutional by the Supreme Court because it does not truly promote competition – the fundamental principle espoused by the Constitution.

-1972 (P.D. 87, the “Oil Exploration and Development Act of 1972.”)

The law was signed creating a Petroleum Board. PD 334 created the Philippine National Oil Company.

The government created a new body, the Philippines National Oil Corporation (PNOC) with the intention of developing a full-range of petroleum-related operations, including refining, marketing, shipping, transporting, and storage. One month later, PNOC launched its refining and marketing wing when it acquired Esso Philippines--marking the end of Esso's involvement in the country--and the refining and marketing operations of Filoil. Esso Philippines was then renamed as Petrophil Corporation and later as Petron Corporation.

The commercial production of the country's first oil-field, Nido, started at the rate of 40,000 barrels per day.

Masinloc, the country's third oil field started commercial production.


Liquigaz started to operate.

-1996 (RA 8184, the “Oil Tax Restructuring Bill.”)

The law was made to restructure the excise taxes on petroleum products.

-1998 (RA No. 8479, the “Downstream Oil Deregulation Act.”)

The law opened the opportunity for many small and independent refillers and marketers in the LPG sector. The LPG in cylinders sold by these independent players is priced lower compared to the brands sold by the oil majors. LPG Marketers’ Association (LPGMA) was organized in order that its members will have a common voice and representation on issues that affect the industry. LPGMA has been invited in discussion groups before the Department of Energy in order that its position may be heard. In the process, LPGMA has evolved into a group advocating the need of...
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