Today we look at the Royal Decree 4/2013 approved by the Council of Ministers on 22 February and published in the BOE yesterday day 23 regarding the terms of its Title V. On these measures in the sector hydrocarbons, we make the following observations, point by point analysis of each of the aspects that this new legislation has.
1.- Free access to third parties by the owners of fixed storage and transportation of petroleum products.
The law 34/1998: Ley Sector Hydrocarbons and regulating the conditions under which the holders of such facilities were to allow third parties access to the same. The only thing that makes this change is a greater transparency information by the holders as to Prices by the use of the facilities, Prices utilization of transport networks, available capacity, usable capacity, etc. ie mostly administrative issues and more control other than.
This measure does not contribute anything in terms of increasing the competition in sector stations to help lower price thereof.
This measure does not affect such facilities that are within the refineries Spanish, and account for more than 50% of la storage capacity and is in the hands of REPSOL, CEPSA And BP. These storage parks, are unrestricted by the holders thereof, which means a lower logistic costs of fuels by these oil, aspect that also affects the market competition.
The rest of the storage system in Spain, ie less than 50% is in the hands of CLH, heir of the former CAMPSA, namely, the monopoly, with more than 50% storage capacity and the rest, divided 21 operators, of which only Meroil and Decal, have shares above 10%.
Among the shareholders of CLH, we, with CEPSA an 14,15%, REPSOL an 10% and BP an 5%. This means that either directly or indirectly with the three operators ability refining, controlling on a 70% of la storage capacity sector.
Vertical integration, since refining to the distribution stations the fuel, conditions much the ability to compete in the market, since there is a very dominant position of all three operators mentioned that prevents conducting marketing policies that may influence the Prices of the fuels of the stations. The remaining operators, simply follow these steps 3 operators, and in particular REPSOL, with nearly 45% market, being made.
We could expand much more in this area, but I think that may be the subject of further debate.
2.- Streamlining administrative procedures for obtaining permits for the introduction of new facilities.
This measure is important if. Given the diversity of administrations intervening in granting all permissions to obtain the licenses to open a new gas station, this could become a long and tedious process, could discourage new investments in these facilities.
With the new regulations, ensures a unique process and equal in all over the country, and a maximum of 8 months.
It was painful to see how we began to see build one gas station and spent months and months until it opened to the public, even you could see some completely finished, but could not open due to lack of any administrative role. In this regard, This benefited the large oil, more resources, that could withstand time with these facilities without being productive, against the small investor who had put all its investment capacity in the project and looked like taking longer than expected to start monetize your investment.
But we also let, that the implementation of this measure is the same for all, and in the same way that benefits small, also has the same positive aspects for large, whereby is distinctive in order to achieving effective competition leading to a price reduction.
3.- Limitation on duration of exclusive contracts flag.
Hitherto, the contracts flag, could have a maximum duration of 5 years old. Now limited to 1, with the possibility of automatic renewal until 3 years old.
A flag contract by a oil, requires substantial investment, that logically, want to capitalize on the image of the service station, uniforms, corporate advertising etc.. and therefore are items to be amortized. For this reason, the oil which stations are carefully think is interesting champion or not.
In this case, There are two options; if the flag has most profitable stations, they can recover the costs of flag, o bien, other formulas are articulated flag so that the oil can recover its investment on a shorter time. In any case it can be assumed that many small business run out of the umbrella of the oil and are forced to close their facilities.
Also do another reflection. The employer of any stations only oblige a champion, is free to do or not, receive different offers, analyze them and choose the one that suits you. When you sign that contract, know the rules of the game that has, during the duration of the same and it is unlikely that the conditions under which signed the agreement in the short-term change, with what should be possible to maintain the same for the duration. If you are aware that these rules may change, and which will be against the flag contract having, which will be not to sign any contract and run the same private label development, which of course is more expensive to be covered by a recognized brand in the market. Not the same open a REPSOL gas station with an image the CEPSA another which is GAS STATION Oil and Retail (to put a fictitious name any)
4.-Ban recommended retail prices.
Most contracts flag, are signed with a firm purchase the product and a fixed fee for every liter sold. The oil billed fuel its bearer to retail price market and will pay a fixed amount agreed upon in the contract. If the contract was simply commission and sells on behalf of the oil, This in turn has the freedom to put the retail price it deems appropriate at all times, because what sells is his product.
Never force the standard-bearer to maintain this price, to which the company will bill but the champions usually respect him. Why? Very simple, if they put the highest price, be out of the market and not sell and if you put more low, that price reduction go directly into your pocket and reduce margins considerably, margins as for stations entrepreneur, already being base to further reduce.
Therefore, I do not believe that this measure will lead to increased competition in the market so that they can reduce prices.
5.-Facilitate the opening of stations in malls and other surfaces.
While it is true that not many, if there stations in malls, industrial estates, large surface parking, what makes this measure is to facilitate the opening of such establishments.
If we analyze the behavior of the service stations superstores in Spain, if we can see they have always had cheaper prices and that in many cases have distorted the market. But there is a simple explanation. The real business of supermarkets, is to get sales in the products they sell in their establishments and used as bait the gas station. Gasoline not your business, and do not hesitate to reduce the margins, until not even make money with it, so that they can attract people to their centers. Only one can take advantage of these prices, if you have previously purchased the large surface.
What would happen, if there was no obligation to purchase previously centers?. The answer is obvious, or would have stations or conversely, their Prices would be at the level of the rest of the market, as a business over the large area and must remove their profitability.
But another thought. This market distortion affects both large oil, as small entrepreneurs. Is, affects far more important to small business, that if they suffer the direct consequences. Let us the following question .... Who buy Carrefour, Auchan, Eroski, selling fuel? The answer is straightforward, bought it for those operators that it can sell and none other than the Big Oil.
In this regard, whether there is a field where you can increase competitiveness and reduce market prices, and with Low Cost stations. Unmet Stations, since personal, where self is served and pay by credit card or in cash. But in this case, the Price reduction not given by commercial banks reduced, but by reducing operating costs to be moved directly to Product price.
6.- Minimum mandatory targets sales or consumption of biofuels.
In case you do not know, both gasoline as diesel, has an obligation to keep a certain percentage of bioethanol and biodiesel in composition.
Hitherto, this part of the fuel, was exempt from excise. From budget law 2012, if subject to taxes, thus it has been transferred directly to Retail prices of both gasoline and gas oil.
Must be taken into account, that both biodiesel as bioethanol, are considerably more expensive than the gasoline and that diesel fuel and also subject to wide fluctuations in prices. The RDL approved Friday reduces the mandatory minimum amount of these components so that if there may be a small reduction in prices, but believe me, almost negligible, since it means only 4,1% of la composition of diesel and 3,9% of la gasoline composition.
Conversely, This measure has two negative counterparts, on one side is detrimental to the industries producing the biofuels, if already in Spain was in a precarious, can make the final nail and on the other hand, affect environment. The functionality of these biofuels they are much cleaner, less polluting and have nothing to do with the quality of products.
But in times of crisis ..., already known, other priorities.
The RDL approved yesterday, in a very short, nothing to say, will mean increases in competition that may be reflected in the retail prices of gasoline.
When the retail price a product, the 45% is cost thereof, and on which you can act and which is given by international markets, other 45% are imposed on which the government if it could act, only leaves room for action on the 10% the same and much of this is costs, logistics, personal, etc ... What can make oil?,¿ reduce their margin? ¿And small businesses?How to subsist?
If we have a much more competitive market, we go to the same structural reforms. The model currently operates, is heir to a shoddy deal monopoly, to concentrate in the hands of 3 Companies almost 75% market and put huge barriers to entry for the consolidation of other companies tried to develop in the Spanish market. SHELL, TOTAL, EXXON, AGIP, ERG.. are companies that have tried it, but in the end they left because they did not see the profitability of staying in business.
And one last thought. If you really want to lower the price of gasoline in Spain and immediately, the government has absolute authority to make acting on the taxation, you diesel hoy see reverse a 1,410 € / litro, if VAT I had not uploaded it would be selling to 1,375 € / litro. And we will not get into the variations on IVMDH that in their regional section has been introduced where none was or increased in the CC.AA. that already had.
But you know, when there is need to raise.