Tax on fuel also affects prices, says JGRA
The government’s imposition of additional taxes on gasoline is among the factors that have given rise to the existing prices at service stations, the Jamaica Gasoline Retailers Association (JGRA) said.
The Association was responding today to statements earlier made by Finance Minister Audley Shaw that he would formally write to Energy Minister Dr. Andrew Wheatley and Commerce Minister Karl Samuda for them to investigate unfair pricing policies of persons involved in the petroleum trade.
It said Shaw, in comments at the inaugural natural gas conference at the Jamaica Pegasus Hotel in New Kingston, unfortunately blamed service stations for giving rise to inflation.
The JGRA said that with the decrease in the cost of crude in late 2015 and 2016 down to a record low of US$26 per barrel, their dealer margins were on average 11 per cent.
Today, with the increase to just under US$50 per barrel dealer margins have declined to an average of eight per cent, it added.
“We note that the final cost at the pump is based on the ex-refinery prices provided by Petrojam Limited,” the JGRA said.
“The other factor is that the marketing companies’ margins have increased from 11 per cent to 15 per cent. The recent price increases by the marketing company falls in line with their plans to increase their margins,” said the Association.
It noted that petrol stations in the same zone showing a price variance mainly results from the varying cost of the petrol provided by their respective marketing companies.
“The JGRA is therefore at a loss as to how Minister Shaw could blame the retailers, notwithstanding the fact that the government has applied additional taxes on gasoline which is also reflected in pump prices,” it said.
Among the revenue measures Shaw announced during the Budget presentation in March, this year were increases in the Special Consumption Tax on fuel, ranging from $0.43 to $7.36 per litre, to raise $7.5 billion.