Energy Minister calls emergency meeting with petroleum marketing companies
Energy Minister, Phillip Paulwell, has summoned petroleum marketing companies to an emergency meeting on Thursday, amid concerns that local gas prices are not reflecting the massive fall in world prices.
As a result of the steep fall in oil prices over the past six months, the national refinery, Petrojam, has reduced the price of petrol sold to marketing companies by 25.6 per cent.
However, according to a statement from the Energy Ministry, Pauwell is concerned that even taking into consideration the lag effect of the price movement, consumers are not receiving the full benefit of the price reduction.
The statement says preliminary estimates indicate that despite the reduction in petrol prices to the marketing companies, the reduction at the pump ranges from 14 to 16 per cent.
Crude oil prices on the world market have plummeted to a record five-year low.
Prices have fallen by more than 40 per cent since the beginning of the year, moving from just over US$115 per barrel, in January, to just under US$56 at the beginning of the week.
It has been predicted that prices may fall even further, to as low as US$40 per barrel next year.
Paulwell says if marketing companies and retailers use the opportunity of falling prices to increase their margins instead of passing on the savings to consumers, then this will be inimical to the country’s growth prospects.
Paulwell says he will meet with gasolene retailers following Thursday's meeting with the marketing companies.
Meanwhile, financial analyst, Ralston Hyman, says the energy minister has little power to force the petrol marketing companies to pass on reductions in oil prices.
He says the meeting called by the Energy Minister is a good step.
However, he says given the structure of the petroleum distribution system, marketing companies would not fully pass on the reductions in oil prices.
Hyman agrees with Paulwell that passing on the reduced prices to consumers is important to the growth of the economy.
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