PETROL JITTERS

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PETROL JITTERS

Retailers fear US-Iran crisis could affect prices

BY BALFORD HENRY
Observer senior reporter
balfordh@jamaicaobserver.com

Friday, January 10, 2020

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THERE is concern within the retail petrol sector as service station owners watch the developments arising from the current US-Iran crisis.

“Naturally, we would be concerned. There is huge concern,” Phillip Chong, former president of the Jamaica Gasolene Retailers Association (JGRA), admitted yesterday.

Similar views were echoed by his successor Gregory Chung, who said that the JGRA is concerned that the price of petrol could skyrocket if the crisis continues.

“The members are watching the developments, because we know that it can escalate and we wouldn't want to end up with a US$100 a barrel situation. That would create serious problems for us, and the customers who would end up having to pay for the increase,” Chung told the Jamaica Observer's weekly Auto magazine.

He said that the situation would not only affect the sale of petrol at the service stations, but also the value-added convenience stores, including the food marts, which would end up with much less customers.

“And if it is sustained, it would force customers to make adjustments to their lifestyles. So, this is something that we have to be watching very closely,” Chung said.

However, he admitted that the information available from the media has been conflicting, and while at some point it would appear that some progress is being made towards a settlement, the other moment things seem to be escalating.

Chung acknowledged that, just yesterday, local refinery Petrojam's petrol prices fell by $3. However, he also noted that Petrojam would have been in a position to absorb the early increases in the global prices, through their forward buying process, as well as the dive in the value of the US dollar recently.

“But, how long would they be able to do that. The increases would be reflected in the weeks to come,” he stated.

On Tuesday, Iran launched more than a dozen missiles at two Iraqi bases housing United States and coalition troops. It was in retaliation after US killed its top general in a drone strike last week.

President Donald Trump, in a televised message from the White House on Wednesday, said no US or coalition troops were killed in the attack.

Petrojam yesterday announced a price of J$124.2 per litre of gasolene 87, down from $127 per litre since January 2 and gasolene 90 at $127 down from $130 per litre.

Since 2019, gasolene 87 prices have fluctuated between a high of $137.2 in April 2019, and the lowest it had been for the year, $116.7 per litre in January 2019; and gasolene 90, between the $140.8 price in April, 2019 and the $119.5 in January 2019.

Note that the ex-refinery price is determined by adding certain logistic costs, financing costs, foreign exchange costs and government taxes to the reference price, which includes freight and insurance costs, ocean loss and terminal fees, among others. This is then converted to Jamaican dollars to establish the price per litre.


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