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By: Marvin Germo | July 10, 2019


Stability of Oil Price

The global crude oil price is not as stable as you think it is and this leads Petron Corporation to hold its expansion plans here in the Philippines. The oil company disclosed that it is currently spending about $1 billion for the improvement of its refinery and for the expansion of its retail network within the next three years. $600 million of this amount is being spent for the expansion of its refinery in Limay, Bataan. Despite the challenge to face the unstable prices of global crude oil, the firm is still on the right track in terms of its plans to get a bigger network. Although the succeeding expansion projects will be placed on the back burner, let’s all hope for the stability of the global market.

Catch me in my live training events! (quick plug)

The heart of why I do these seminars is I want to build a generation of Filipinos with the right foundation in stock investing.  I want to bring smart investing to every Filipino around the world! If you would like to know more about how you could time the market check out the trainings below.

Stock Smarts Cagayan De Oro – July 20 & 21, 2019
Stock Smarts Hong Kong – August 11, 2019

ICON Iloilo – August 17, 2019
Stock Smarts UAE – August 30 – September 3, 2019
Stock Smarts Qatar —  October 3 – 6, 2019
Stock Smarts Taiwan – November 2, 2019

Fluctuation Is Getting Bigger

Saying the oil price is unstable seems like a pretty simple statement. It becomes complicated when we hear the word “fluctuation” as this term signifies a real challenge in the global market. For Petron, its business is getting worse because the fluctuation in crude oil prices is increasing. And it’s not just Petron that gets affected because of these large fluctuations but as well as other companies in the industry. Lower prices among independent players make an ultimatum for big oil firms now that 37% of the total industry volume are small players offering oil at low prices. To add, smuggling may be another reason why competition among oil companies is getting stiffer.

Is Smuggling Affecting The Business?

Fluctuation is already a big thing. What more if there are other issues in the economy that are out of hands of oil companies? While challenges arise from unstable oil prices and stiff competition, oil firms also see smuggling as something serious that’s affecting their business. This activity has been rampant in the Philippines because of the implementation of excise taxes on oil and fuel products. Excise taxes on these products become P12 or double the amount of the previous tax law when the Tax Reform For Acceleration and Inclusion Law was put into effect last 2018. It seems like this new tax provision allowed the growth of oil smugglers in our economy.

Focusing On Other Businesses

Since the expansion is put on hold, Petron’s game plan is to focus more on other businesses. The firm sees small growth on earnings because of this and expecting to generate P8-9 billion this year, a little higher than the P7.1 billion it reported in 2018. Looking back, this number is 50% lower than what it made in 2017, which was P14 billion. Imagine how big is the effect of fluctuation to Petron. Addition to this, the oil firm noted that the P8-9 billion figure is already significant considering the worsening oil prices. Most of the possible earnings will come from Malaysia, as what the company expects, since 40% of its business is there.

I’m excited to share my 5th book overall and the 4th book in the Stock Smarts series, Stock Smarts: Breaking the Resistance – How to time your traders perfectly. The heart of this book is to teach you strategic ways on how to come in and buy and sell stocks in a way where you come as the market is headed up and come out as the market is headed down. The book is now out and exclusive via Marvin Germo Book Orders.
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