Tue | Dec 6, 2016

Pump watch as oil price fall continues

Published:Sunday | December 28, 2014 | 12:00 AM
A gas station worker takes down the old price at the service station at the intersection of Red Hills Road and Elizabeth Avenue, St Andrew, on Pump Watch Day earlier this month. - File
Leonard Green, head of the Jamaica Gasolene Retailers Association. - Contributed
Minister of Science, Technology, Energy and Mining Phillip Paulwell. - File
The entrance to the Petrojam oil refinery in Kingston. - File
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Chad Bryan, Staff Reporter

As oil prices continued to plummet globally, last week Energy Minister Phillip Paulwell made the call for a 'Pump Watch Day', for which motorists would carefully scrutinise the cost of fuel at gas stations across the island.

According to Gleaner Online, Paulwell made the call over concerns that local gas prices were not reflecting ongoing decreases in world prices. Over the past three to four months, oil prices have been plummeting, moving from in excess of US$110 a barrel to US$55 dollars per barrel.

On December 18, Petrojam announced a three-dollar cut in prices for all types of fuel. For Pump Watch Day, Paulwell said consumers were to record the prices displayed at the petrol pumps before the Petrojam slash and make sure that the reductions announced are reflected in the prices displayed at stations the following day.

Going further, the energy minister said consumers should use the information they recorded to inform regulatory authorities and the media in order to expose those gas stations where the price reductions were not reflected.

Unfair practices

He is insisting that there is no need for an increase in the margins of the marketing companies and retailers. Paulwell also declared that even in the absence of price controls, the consumer must not surrender to unfair practices.

Industry and Commerce Minister Anthony Hylton says he has asked the Consumer Affairs Commission and the Fair Trading Commission to pay particular attention to the issue.

The gas station operators' umbrella organisation has endorsed the initiative. President of the Jamaica Gasolene Retailers Association, Leonard Green, had expressed satisfaction with pump prices in recent weeks leading up to Pump Watch Day.

"What Petrojam is passing on is consistent with the general trends, in my mind, certainly in the US market," he was quoted in The Gleaner dated December 18.

Since concerns were raised about the passing on of the reduction of prices to the consumers, the call had been heard by the marketing companies.

Consistent reductions

"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," Green said.

Green pointed out that expectations of the exact level of price reduction announced on the world market being reflected at the pumps in Jamaica with immediate effect were unrealistic.

"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," Green explained.

According to an article by the United Kingdom-based BBC, oil prices are likely to continue to fall well into 2015. This assessment was made by the International Energy Agency (IEA). The IEA, a consultancy to 29 countries, said weak demand and the US shale gas boom meant crude's recent fall below US$80 a barrel was not its lowest price.

The US Energy Department also said that it expected low oil prices to last into next year.