LETTER OF THE DAY - Manufacturers, follow JPS's lead
THE EDITOR, Sir:The recent news by the Jamaica Public Service Company (JPS) that customers will see a reduction of approximately 8.4 per cent in their November light bill is welcome news for the Jamaican consumer. This pending reduction in electricity bill is made possible because of the fall of world oil prices. The collapse of world oil prices is a result of an oversupply of the community due largely in part that supply from the United States of America unconventional fields is rising faster than global demand. Additionally, increase in output mainly from Saudi Arabia and Kuwait, both members of the Organization of Petroleum Exporting Countries, has contributed to a glut on the market. According to some reports, both Kuwait and Saudi Arabia have indicated an unwillingness to reduce output. It is, therefore, possible to see even further reduction of world oil prices.
While the news from the JPS is most timely, coming just in time for Christmas, we must ask ourselves why it is that the Jamaican consumer is not benefiting more from lower prices of goods and services because of the decrease in world oil prices. Why is it that the Jamaican consumer did not see a reduction in their October light bill? After all, world oil prices have been on the decline for quite some time.
A barrel of oil is at its lowest since October 2010, at around $81 per barrel. Global oil consumption is currently at 90 million barrels daily, driven mainly by demand for transportation fuels.
Given the fact that electricity cost plays a major role in Jamaica's manufacturing sector, we should by now be reaping some lower cost, as consumers, as Brent crude oil has been falling over the weeks.
Interestingly, when world oil prices are on the increase, the manufacturing sector does not wait a minute before they pass on to the consumer the higher cost for goods and services.
It is time the Jamaican manufacturers pass on to consumers whatever price reduction accrued from lower world oil prices. This will undoubtedly ease the economic burden on consumers and provide some temporary respite. However, maybe its possible that some manufacturers are instead waiting for the price of oil to increase once again. Let us for once think about the poor consumer instead of the bottom line.