Dark days ahead

The first time Alex Foster visited the petrol station after returning home from a two-month trip abroad, he was stunned at how steeply gas prices had climbed.

Foster, the owner of a company that provides ‘live’ entertainment to resorts across Jamaica, had previously not paid much attention to the additional dollar here and there that he’d been paying for a litre of gas every week.

But, after spending this brief period abroad, and with prices rising by double digits since last December, it suddenly hit home to him how much more he was forced to fork out to fill up.

“I was away for two months, and I came back and I was shocked because I think what happens is that the prices have been gradually going up every single week, so being here, sometimes people don’t realise it until one day you just wake up and you notice how expensive it has become,” revealed the Montego Bay-based businessman.

Before his trip, Foster spent an average J$7,500 on a full tank of gas, but by the time he returned home, it had skyrocketed to J$10,500. And that was before Russia invaded Ukraine on February 24, sending global oil prices soaring from US$65 to US$130 a barrel at one stage. Crude closed at US$109.33 on Friday, up 3.12 per cent. Brent crude for May delivery rose by US$3.34 to US$112.67 a barrel.

“I came back two months later and went to the petrol station, fill up and the girl said $10,500. I had to ask her if she was sure,” Foster told The Sunday Gleaner last week. “It went up by $3,000 just in the two months I was away. And since I’ve been back every week I realise – now that I’m paying attention to it – that the prices are going up.”

With Dr Nigel Clarke, Jamaica’s finance minister, making it clear that the special consumption tax on fuel will stay, despite calls for an ease – he has instead announced a $2-billion provisional package to support vulnerable Jamaicans most adversely affected by the fuel price increases – Foster should not expect a respite any time soon.

Neither should the operators of the over 508,000 registered vehicles here, according to the Caribbean Centre for Renewable Energy and Energy Efficiency’s (CCREEE) 2020 energy report card on Jamaica – its most recent – published in November 2021.

As of Monday, March 7, Jamaican drivers paid US$1.45 per litre of gas, while diesel cost US$1.442 per litre, according to GlobalPetrolPrices.com, the publishers of wide-ranging, up-to-date information on retail energy prices around the world.

IMPOSSIBLE TO PREDICT

The world has been caught in the grip of an oil price shock even before the Russian invasion, with fuel costs soaring due to rapidly increasing demand as countries emerged from COVID-19 pandemic lockdowns and a decision by the major oil-producing countries, including Saudi Arabia and Russia, not to raise production.

The invasion of Ukraine and the response by the West, including announcements by the United States and the United Kingdom to ban imports of Russian oil and decisions by major oil companies, including Shell, BP and ExxonMobil, to end their operations in Russia, have added to the uncertainty over if, or when struggling consumers will begin to see a decline.

“If somebody claims they can tell what the price of oil is gonna be in five years, they’re probably lying to you. Because of all of the geopolitical effects that come to the oil market, it is notoriously difficult to give intelligent estimates on how much prices would rise,” Gerald Lindo, a sustainable energy expert at the Barbados-based CCREEE, said Thursday during a webinar on fuel and electricity pricing.

“But there are some things that might push it one way or the other. Firstly, we still have this war going on in Ukraine. If this wraps up tomorrow, and everything goes back to peace and cooler heads prevail, then maybe people get skittish and the markets will cause the price of oil to go back down. If it keeps going, or, God forbid, if it expands and then there is a greater conflict, then one could expect the price of oil to again shoot up because of supply issues.”

This isn’t much comfort to Ria Murray, a Grenadian communications consultant, who, like Foster, has had to cut down on the amount of petrol she buys whenever she visits the gas station. Grenadians have been grappling with gas prices of over US$5.50 per gallon for several months, with prices reaching over US$6.50 before the government intervened.

Before the recent increases, Murray normally spent about US$33 for a full tank of gas, but in recent weeks this has jumped to over US$42.50. As of Monday, March 7, Grenadians pay US$1.221 per litre of gasoline and US$1.199 per litre for diesel.

“Before, I would fill up my tank diligently, but these days I just look at trying to keep my tank about half. I get to the gas station, I look in my purse to see how much I can spare from what I have to kind of fill up just enough so it takes me through the next few days,” Murray told The Sunday Gleaner. “Rarely do I fill my tank these days.”

PUSHING FOR INCREASE

According to CCREEE, the transport sector is the largest consumer of fuel in the Caribbean Community (CARICOM), which means the volatile swings experienced in the oil markets last week and predictions of even higher prices present a headache for Godfried Ferdinand, head of St Lucia’s National Council on Public Transport, the umbrella body of 32 transport associations in the country.

Although public service vehicle operators receive a government rebate of about US$260 a year, the sector, which has been left reeling by COVID-19, is having a tough time coping with the rising gas prices and is pushing government for an increase in fares.

“I have made an appeal to the government, and I have indicated to them that the sector needs an increase and, in any event, it would be best to give the increase now,” Ferdinand told The Sunday Gleaner. “Transportation is one of the driving forces to economic development and you must treat this particular sector well enough to promote economic development so that you can have a reliable, stable sector.”

In Barbados, which has the highest fuel prices in the Caribbean and the 20th highest in the world (US$2.050 per litre of gasoline as of Monday, March 7), consumers are set to suffer further miseries as the sole power company plans to raise electricity prices.

Citing the surging global oil prices, Johann Greaves, the director of operations at Barbados Light & Power, made it clear the increased cost would be passed on to customers through the fuel clause adjustment, the component of customers’ electricity bills directly influenced by the cost of oil on the global market.

And, with struggling motorists across the region having to pay more for petrol and consumers bracing for increases in the cost of living, the thought of even higher prices at the pump strikes a sense of dread in Jonathan Vidal, a Dominican ground tour operator, whose business has almost been crippled by COVID-19.

A despondent Vidal complained that transport operators would have to bear the increased costs because he did not anticipate a rise in fares.

“Dark days ahead,” Vidal told The Sunday Gleaner when asked about the prospects he was facing, before repeating for emphasis: “Dark days ahead.”

editorial@gleanerjm.com