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CAC survey finds high petroleum retail mark-ups

Published:Saturday | January 24, 2015 | 1:00 AM

Richard Mitchell, Staff Reporter

THE CONSUMER Affairs Commission (CAC) has produced evidence that a large number of retailers in the petroleum trade have not been passing on price reductions to motorists in line with the price cuts given to them by the state-owned oil refinery, Petrojam.

A recent CAC National Petrol Price Survey indicates that the prices at the pump now attract a "notably" high mark-up. Retailers have increased their mark-up from an average of 13 per cent, in the past, to 21 per cent, today, the survey highlighted.

The CAC report concludes that "the mark-ups gained by the retailers and their marketing companies continue to be higher than the national average".

Petroleum-marketing companies had said on December 19, 2014 that gas prices would be reduced to reflect the price cuts offered by Petrojam, but a CAC survey shows that the reductions were insufficient.

The survey collected the prices at the pump from 188 gas stations islandwide between December 22, 2014 and January 8, 2015.

According to the survey, between December 18, 2014 and January 8, 2015, Petrojam prices for 87 (E-10) fell by 6.33 per cent while prices at the pump, on average, saw a 5.41 per cent reduction.

The cost of 90 was reduced by 6.22 per cent by Petrojam. However, retailers adjusted their prices by only 5.01 per cent.

Petrojam sold USLD (diesel) for 4.17 per cent less, while retailers reduced the cost by an average of 4.02 per cent.

PRICES FALLING BUT …

"The results show that retail prices have continued to fall. However, the majority of these prices have not been falling in line with Petrojam's price reduction," the National Petrol Price Survey, commissioned by the CAC, stated.

The survey highlighted Portland as the parish that had the majority of gas stations cutting their prices in line with reductions from Petrojam.

The CAC noted that it received complaints from consumers expressing concern that they have not been benefiting from the falling oil prices. According to the survey, between June 2014 and January 2015, world prices have fallen by approximately 60 per cent.

Last month, Energy Minister Phillip Paulwell urged consumers to record the prices displayed at the petrol pumps and compare them with the reduced prices announced by Petrojam. The minister's statement drew criticism from the Jamaica Gasolene Retailers Association, who called for a withdrawal of the statement.

Petroleum-marketing companies include Total, RUBiS and Texaco. These companies sell petrol products to their dealers (the individual gas stations), who, in turn, set the price the customer pays at the pump. Issued every week, the Petrojam price is the amount the company sells to the marketing companies. The companies are expected to add their mark-up.

richard.mitchell@gleanerjm.com