Motorists already reeling from three consecutive weeks of rising gasolene prices should brace for further increases at least over the next fortnight, say industry experts.

The cost of gas has moved up some $5 a litre over the period, with the latest increase announced by state-owned oil refinery Petrojam pushing 87 octane to $83.78 and 90 octane to $85.44. After the addition of margins by dealers last week, prices at the pumps in some parts of the island for the higher grade 90 octane were over a whopping $103 a litre.

Unfortunately, the primary cause of the ‘gas pains’ is an external factor beyond the control of any Jamaican entity — crude oil prices. The price of crude, the main raw material used to produce gasoline and other petroleum products, has been spiralling upwards the past few weeks.

“The fundamental reason happens to do with the price of crude oil which has moved up markedly over the last five weeks in particular,” said consultant to the Petroleum Corporation of Jamaica (PCJ) DR Raymond Wright.

“And the reason is quite simple — it’s tied to the decreasing value of the US dollar compared to other currencies, and once the US dollar loses its value against the other major currencies, then you have to pay more in US dollars for oil,” Wright explained to Sunday Finance.

World oil prices advanced above US$82 on Friday with the US dollar weakening as indebted Ireland moved towards a financial bailout.

There’s also the fundamental problem of supply and demand. China, the largest consumer of energy in the world, is expected to increase oil consumption by 400,000 barrels a day in 2011 and drive world oil demand for years. According to president of the Jamaica Gasolene Retailers Association (JGRA), Trevor Heaven, the market is being impacted by a prevailing imbalance to the economic model of price determination.

“The demand for crude and the lack of refining capacity in the US in particular; the capacity is actually bursting out the seams at this point,” said Heaven.

However, additionally, the problem of spiralling gas prices on the island has been exacerbated by an increase in the prices charged to dealers by one multinational marketing company, disclosed Heaven.

“What I find amazing is the fact that, bearing in mind that we’ve had some significant increases in prices on the market over the last three weeks, one marketing company chose to increase the price to their dealers — in addition to the Petrojam movements — by $1.50 per litre. We are very uncomfortable with that position because there have been no discussion with the dealers themselves regarding this additional movement in price which has to be passed on to the consumer,” argued the JGRA president.

He said the reason given for the price increase by the marketing company in question is to maximise returns to shareholders.

“Their justification for all of this is the investment that they have made over the time, the investment that they propose to make and the shareholders requesting the best return on their investment…Their shareholders come first at the expense of the Jamaican population,” said Heaven.

The island’s existing multinational marketing companies are Total, Shell and Chevron, operators of Texaco service stations.

Heaven said the hike in prices at the pumps due to the increase in charges by the marketing company, compounded with what was passed on by Petrojam, will reflect badly on the dealers.

“When that happens, the customer, having heard the announcement of the $1.16 per litre increase in prices and seeing a total of $2 plus more on the prices from last week, sees the dealer as being dishonest when, in truth, the dealer is responding to the price that was given to them by the marketer,” said Heaven, who added that outside of that additional increase, marketing companies are already getting 1.5 per cent increase by virtue of what they get as a rebate from Petrojam.

“On top of that, they charge rental for the sites. I call it abuse and downright exploitation of Jamaican people,” said Heaven.

What’s worse is that going forward the JGRA president expects additional increases in gas prices due to external forces.

“I suspect that, based on the trend over the past few weeks, motorists can expect more increases,” he said while encouraging Jamaicans to conserve.

The PCJ’s Wright seemed a bit more optimistic with his projections. He expects gas prices to stabilise next month.

“My near term projetions is that oil price will stabalise at about that price towards the end of the year — it probably won’t go much higher than the US$85 range — and one of the reasons for that is the value of currency again,” noted Wright.

“The Euro Zone and the Euro is also in trouble and that will be stabalised, one believes, by some interventions by multinational agencies next week, so we will see a bit of stabilisation of the Euro as well as the US dollar temporary,” he continued.

“So oil prices will remain in the mid 80’s…Maybe they will go up slightly next week but not much further… but every consumer has to look out for higher oil prices going into December.”