The state owned oil refinery, Petrojam, is refuting claims made by the Private Sector Organization of Jamaica, PSOJ, that it’s guilty of not passing on the full benefits of the reduction in the price of crude oil to local customers.
Petrojam says the PSOJ’s statements are particularly disappointing, as they followed its release of a comprehensive advertorial titled “Gas Prices Explained”, which was published in both major newspapers last week.
In its response late last night, Petrojam says the PSOJ has consistently linked movements in Petrojam’s ex-Refinery prices for gasoline to the West Texas Intermediate, WTI, reference prices for crude.
But it says its ex-refinery prices are not indexed to the WTI prices.
Rather, it says its prices are indexed to the US Gulf Coast Reference, USGC, price.
It says the USGC is a benchmark for finished petroleum products.
Petrojam says there isn’t a one-to-one relationship between movements in the price of crude oil and the price of its refined petroleum products.
It’s pointing to the depreciation of the Jamaican dollar, transportation costs and other factors as variables that affect its ex-refinery prices.
It says although the data show a 12 percent increase in Petrojam’s prices for gasoline between January and June, the increase only amounts to 7 percent when depreciation is taken into account.
In addition, Petrojam says its ex-refinery prices more closely track prices in Miami which are also referenced to the USGC prices, but which have similar transportation costs and market dynamics.
Petrojam says between June and December 15 this year, it reduced its ex-refinery gasoline prices by approximately 25-percent and retail prices for gasoline have fallen by approximately 15 percent.
It says over the same period the price of gasoline in Miami has fallen by 24 percent.