A respite from high gas prices
Published by www.jamaicaobserver.com on Jan 23, 2008
Jan 23, 2008

Jamaican consumers can expect a slight ease in gasoline prices over the next few months as concerns over a US recession will likely push the price of its main input - oil - downwards in the near future, believes Dr Raymond Wright, consultant and former group managing director of the Petroleum Corporation of Jamaica (PCJ).

Yesterday light, sweet crude for February delivery fell 72 cents to settle at US$89.85 a barrel on the New York Mercantile Exchange and had earlier in the day nose-dived to as low as US$86.11, its lowest pice since December 6.

More indicative, is the fact that OPEC basket prices have been declining weekly since reaching a record high at the beginning of 2008.

Wright projects that oil prices will move into the US$80's over the coming months as US recession fears drive prices downwards but likely remain at US$95-100 throughout the calender or fiscal year,
"There are no rules here, so to speak, but my personal analysis - and I am not saying that I'm the most competent to say so - is that oil prices will go down into the 80's in the next couple of months and if there are geopolitical turmoils, which are possible, we will go towards the hundreds," said the consultant.

More instructive, however, is the fact that Gulf coast gasoline prices, which, the state-run oil refinery, Petrojam, uses to set its prices, have been declining with the last reduction on Monday - and average reduction of 1.5 per cent.

Indeed, all indicators points to a trickle-down effect to the gasoline pumps here in Jamaica as well. Petrojam billing prices dropped from a record high of 60.3069 per litre for 87-octane gasoline and 61.7497 per litre for 90-octane last Thursday, by J$1.75/Litre and $1.80 respectively.

The move by retailers along the US Gulf Coast suggest a reduction tomorrow by the state refrinery.
In the meantime, high prices are hurting retailers who have to find additional capital to maintain supplies of the precious fuel.

"If we are selling we buy too and we need additional capital," Jamaica Gasoline Retailers Association (JGRA) president, Errol Edwards, told the Business Observer yesterday. "It doesn't really help us and in a different way we are consumers having to buy to sell."

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