Oil price decline bringing satisfactory prices to the pump- JGRA head
Published:Wednesday | December 17, 2014 | 4:29 PMChristopher Serju
Jamaican motorists are enjoying the benefits of a continuing slide in the price of oil on the world market, as reflected in the ex-refinery prices set by the state-owned refinery, Petrojam, over the past six weeks.
That endorsement has come from Leonard Green, president of the Jamaica Gasolene Retailers Association (JGRA), who has expressed satisfaction with the price at the pump in recent weeks.
"What Petrojam is passing on is consistent with the general trends, in my mind, certainly in the US market," he told The Gleaner.
However, Energy Minister Phillip Paulwell has called for all consumers of petrol to make today 'pump watch day' and closely observe the cost reduction announced by Petrojam yesterday evening and compare it with the cost of fuel at the pumps at petrol stations during the course of the day.
Paulwell suggested that with Petrojam announcing a reduction of just over J$3 for all types of fuel with diesel/ultra-diesel recording the largest drop in price, consumers should expect the decreased cost to be reflected in the prices quoted at filling stations.
"There is no need for an increase in the margins of the marketing companies and retailers," Paulwell said. "The consumer must insist on getting the full value of the reduction."
Noting that when there is an increase in petrol prices, it hits the consumers almost immediately, he argued that it was, therefore, only reasonable that when there is a reduction, the consumer should benefit in a timely and fulsome manner.
The price of Brent crude, which is seen as a global gauge, went down by 2.3 per cent in early trading Tuesday, to sell at US$59.60 a barrel, falling below the US$60 a barrel mark for the first time since May 2009.
Yesterday, Petrojam announced ex-refinery prices of $98.14 per litre for 87 Octane, $99.79 for 90 Octane, $98.91 for automotive diesel, and $105.64 for ultra light sulphur diesel (ULSD). This represents a 23 per cent decline since June, when the prices stood at $128.10 per litre for 87 Octane, $129.75 for 90 Octane, $129.17 for diesel and $134 for a litre of ULSD.
Green said indications are that marketing companies have responded to the concerns raised by the JGRA and have been passing more of the savings on to consumers, in recent times.
"Initially, when we had the consistent reductions we realised that the marketing companies were not passing on the full reductions, as announced by Petrojam, to the dealers. Since we raised the concerns, we have seen an improvement," he shared.
The JGRA president noted that consumers were unrealistic in their perception that the exact level of reduction announced on the world market would be reflected at the pump and with immediate effect.
This was unrealistic, he explained, since the price is usual for crude oil, while Petrojam sells refined products, which attract add-on costs.
He explained: "When they hear crude oil prices, remember these are not even the prices that will be applicable immediately. Those prices are for next month's deliveries and so the market does lag behind the announcement of those prices."
However, according to Green, Petrojam prices have been falling in line with rates in the US market as, with the 46 per cent decline in crude prices since June, retail prices in America have fallen by about 24 per cent.