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PSOJ says Petrojam not passing on decline in oil prices to consumers

The Private Sector Organisation of Jamaica (PSOJ) has revealed that research it has done suggests that Petrojam, the State owned oil refinery, has been passing on less than half the reduction in gasoline prices to the market.

The analysis comes as consumers raise concerns that they are not seeing the full impact of the price reduction.

Petrojam bases its price movements for petrol on the U.S. Gulf Reference Price for refined fuel, such as gasoline and diesel, and not based on the price of oil.

In an analysis of the movement of petrol prices in Jamaica this year, versus the movement of the same prices in the U.S. Gulf, the PSOJ finds, among other things, that oil prices rose 10.8% during the period January to June; at the same time, the U.S. Gulf reference price rose 11.8%. That's almost all the increase being passed on by Petrojam...

At the pumps, gas stations hiked prices on average by less than 9%. The opposite is reportedly being seen, now taht prices have been going down. 

The PSOJ says its analysis shows that as oil prices fell 28% for the period July to November, the U.S. Gulf reference price for gasoline fell 30%. However, Petrojam's price cut for the fuel was only 12%, a decline which was less than half the reference prices, which it says it uses to price its products. At the pumps the reduction was approximately nine per cent.

The PSOJ concludes from its findings that when oil prices rise, Petrojam increases its prices almost in line with the higher prices. On the other hand, the response to a decline in prices from Petrojam is not the same.

The PSOJ says that has led it to conclude that Petrojam is not passing on the full decline in prices, and has urged the refinery to pass on the savings so that it can reach the consumer.



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