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Has Petrojam underdeveloped Jamaica

Published:Saturday | December 27, 2014 | 12:00 AM

Has Petrojam underdeveloped Jamaica?


In his book How Europe Underdeveloped Africa, Walter Rodney wrote about the importance of studying our past, as "it would be impossible to understand how the present came into being and what the trends are for the near future".

In Rodney's view, underdevelopment "expresses a particular relationship of exploitation". Even though his book can be considered controversial, it does raise some important questions about reasons behind underdevelopment.

The recent announcement by the Private Sector Organisation of Jamaica (PSOJ) that Petrojam has consistently failed to pass on savings to consumers, consistent with declines in oil prices on the global market, gave us cause to stop and take another look at the impact of Petrojam on Jamaica's economy.

For example, in 2012, Jamaica's total exports were valued at approximately US$1.1 billion, or J$97 billion, while imported petroleum products were valued at approximately US$1.6 billion, or J$142 billion. This represents a US$500-million, or J$45-billion, trade deficit on petroleum products alone.

I am quite sure that a review of 2013 will show similar negative trade numbers. It would be interesting if we were able to take an in-depth look at this deficit over the past 20 years or so to get a better picture of the impact Petrojam's operations has had on the Jamaican economy. This does not even include the strain on the Jamaican Government and, by extension, its people, to find the US dollars needed to import the petroleum products for the refinery.

Petrojam also has a direct impact on the costs of electricity, another driver of economic growth. With some 60 per cent of the country's electricity bills being a pass through from Petrojam, when Jamaicans complain about high electricity rates, we should be looking directly at Petrojam and, indirectly, at the Jamaica Public Service Company Ltd.

Commercial transportation costs are also a direct result of high diesel prices and this also leads us to yet another cost of the refinery's policy of selling high sulphur diesel into the market for decades.

The exhaust fumes from a typical diesel engine are much "dirtier" than gasoline engine's as studies have shown them to be unhealthy for both humans and the environment. These studies show that exhaust from diesel engines is made up mainly of gases and soot.


Whereas the gas portion of diesel exhaust is mostly unhealthy carbon dioxide, carbon monoxide, nitric oxide and sulfur oxides, the soot portion is made up of particles such as carbon, organic materials and traces of metallic compounds. As such, the exhaust is believed to play a role in various health problems, including eye irritation, headache, asthma and lung and heart diseases.

The fact that Jamaicans have been exposed to high levels of sulfur for decades can only mean that the country has been unhealthier for the experience. Thankfully, the country is now able to purchase relatively cleaner diesel, but after decades of high-sulfur fuel, the country has already paid a high health-care price.

Many Caribbean countries have taken the decision to close their oil refineries, some of which were much more efficient that our own.

So, has there been a net positive for the Jamaican Government owning and operating an outdated oil refinery or has it been more of an exploitation at the expense of Jamaica's economy? I implore the PSOJ and other organisations to take a closer look at this.

Jerry Minott