Petroleum sector suffering from high gas prices
MANDEVILLE, Manchester — Jamaica Gasolene Retailers Association President Dianne Parram says the continued increase in gas prices is having a “devastating impact” on petroleum retailers.
Petrojam on Wednesday said the severe and sustained winter storms in Texas, USA, have forced the full or partial closure of several refineries and the inability of ships to operate, leading to an “extraordinary” increase in US Gulf Coast Reference prices.
Parram told the Jamaica
Observer yesterday that the JGRA has been following the weekly price increases.
“We have been tracking the increase and what we have found is that since November there has been almost a $24 increase in the price. This week it’s $4.50 [for 87 and 90 grade gasolene]. Last week it was $2.87... It has been a steady increase over the last three months,” she said.
“It is having a devastating impact on our members. Once the prices increase it puts pressure on your short-term working capital requirement, so you need more money to continue to do declined volume, so it is having a significant impact on our members,” she added.
“We are seeing that in the short term this is going to continue. We expect it to continue with the freezing weather in the US. This has resulted in a shutdown of oil refineries and drilling wells. The resulting effect will be higher energy prices in the short term which should subside as temperatures normalise,” she stressed.
“However, these erratic movements highlight the volatility of oil prices,” she added.
Yesterday, Petrojam said the supply disruption led to an increase of 12 per cent in the US Gulf Coast Reference price per barrel, which is the main input in determining
Petrojam’s ex-refinery price.
“This situation, coupled with the devaluation of the Jamaican dollar, has led to increases in the refinery billing prices effective Thursday, February 25, 2021,” a press release from Petrojam read in part.
Parram is hopeful that with populations being vaccinated against the novel coronavirus the market will stabilise.
“Again, we are expecting in the coming months, as more persons become vaccinated against COVID-19 and as the market stabilises, to see a roll back, but certainly in the short term, with the reduced refining capacity worldwide, we are expecting continued increases,” she said.