Sun | Jan 22, 2017

LETTER OF THE DAY - Who regulates propane industry?

Published:Friday | December 12, 2014 | 12:00 AM

THE EDITOR, Sir:There has been much talk and countertalk in the last couple of days as to whether consumers are benefiting from the sharp increases in petrol prices. For the most part, the discussions are centred around petrol prices - what we pay at the pumps.

But I really think that we need to pay closer attention to what we are paying for propane and how the price reductions are reflected.

At the end of August, I purchased a 100-pound cylinder of propane. The cost then was $9,100. At that time, the index price was $51.9936 per litre. On Thursday, December 11, I telephoned the distributor after hearing of another week of price reductions. The price quoted to me was $8,150, and based on information from Petrojam, the index price is currently $39.14 per litre.

I must admit that I am no maths pro, but something tells me that the consumers are not getting the full benefit of the decrease, so I sought guidance from one more mathematically inclined. This was a rough calculation used: In August, the selling price was 175 times the index. With a new index of $39.14 per litre today, and assuming a similar mark-up of 175 times, the price should be around $6,850. That $1,300 difference would mean something to almost every consumer in these harsh economic times.

what variables?

While, as consumers, we hear that there are many variables that influence the end price, it would really be informative to have an idea what these variables are.

Do we conclude that, as consumers, we are not being treated fairly by the propane industry? Also, is it rational to assume that the lower the ex-refinery prices, the more the distributors are allowed to mark up the prices to the end users?

The Jamaica Gasolene Retailers' Association (JGRA) has, in a statement, advised that the consumers are benefiting fully from the reduction in fuel prices. Did this include propane, I ask you, JGRA?