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Letter of the Day: Jamaicans could be paying less for petrol

Published:Sunday | November 30, 2014 | 9:44 AM

Jamaicans could be paying less for petrol


The recent article about Petrojam possibly losing some US$140 million in revenue each year if it loses out on the joint venture to supply the Jamaica Public Service Company with propane raised some very interesting issues.

The article focused on the fact that Petrojam?s supply partner, Trafigura, is still casting a long shadow over the People?s National Party.

My reading of the article focuses differently, however. The line that caught my eye read: ?Trafigura controls 90 per cent of the LPG out of Trinidad, 100 per cent out of Chile and Peru, plus it has its own terminal.?

That?s as close to a monopoly as you can get. With that kind of clout, Trafigura can also pretty much dictate LPG prices to the region, for countries that rely on Trinidad?s LPG.

With that much control over the LPG market, one also has control over a large part of the economies of countries that rely on LPG for cooking, heating and other uses of the gas. So it begs a deeper look.

As it turns out, a review of propane prices over the past year reveals just how much the prices in Jamaica have been possibly impacted by this monopoly. While it?s not clear from the article if Petrojam has been purchasing LPG from Trafigura, one can only assume that at some point it had to purchase supplies from Trafigura because of that company?s control of supplies out of Trinidad.

A look at the Mont Belvieu prices for propane over the past year shows an average of US$1.13 per gallon. However, Petrojam?s ex-refinery prices to the local market averaged US$1.83 per gallon for a similar period. This is more than 60 per cent higher than the Mt Belvieu price. SIXTY PER CENT!

Interestingly enough, propane prices from Phoenix Park Gas Processors Limited of T&T average costs that are similar to Mont Belvieu.

Minister Peter Phillips, please have a word with your Comrade Minister Phillip Paulwell, so that you can both investigate why Jamaicans are paying such a hefty premium.