GENERAL manager at Petrojam, Winston Watson, is defending the pricing policy of the island’s sole oil refinery saying that local gas prices are actually in line with international movement of oil.

“If you are tracking the direction of the US Gulf we are moving in the same direction,” Watson told Auto yesterday.

Motorists have repeatedly raised questions about the increase in local gas prices over previous weeks despite little change in international crude oil prices.

And president of the Jamaica Gasoline Retailers Association (JGRA) Trevor Heaven yesterday joined the chorus saying he was uncertain about the mechanisms used to calculate gas prices even after hearing an explanation from Petrojam.

“Even with the calculations they show us it still appears out of line,” Heaven told Auto.

The JRGA president argued that in April oil prices were at approximately US$113 per barrel. “Now it is about US$98 per barrel, but you will have noticed that the price of gas here has increased over the period,” said Heaven.

Watson, however, insisted that the ex-refinery pricing in Jamaica is based on the Gulf Coast pricing, and as such, was not out of line.

“We have tested the correlation between our ex-refinery gasoline prices and those of the US Gulf Coast and have found a very strong, positive correlation of 97 per cent; stronger than the relationship between the crude oil and the US Gulf Coast gasoline prices,” he said.

Watson also cautioned against using varied media reports of international oil pricing to arrive at a conclusion on world price.

He contended that oil was an internationally traded commodity and the price/value of the various grades of oil was assessed and published daily by reputable price reporting services such as Platts, a Standard & Poor’s Company.

“The publications for trades in the US Gulf Coast region form the basis of Petrojam’s ex-refinery prices,” Watson said.

He insisted that the US Gulf Coast was an appropriate pricing reference for Jamaica for several reasons including transparency and liquidity of the market. “These prices are also used by Petrojam’s trading partners including Mexico, Venezuela and Trinidad to determine the value of their products,” Watson declared.

According to Watson, Petrojam’s ex-refinery pricing policy follows the principle of import parity by determining the equivalent cost of importing finished petroleum products directly in the volumes, quality and timing needed.

“The main intention is to ensure that finished petroleum products such as gasoline are priced at no more than it would cost to import the product,” said Watson. “Therefore, our ex-refinery product prices are independent of whether the products are produced by Petrojam (from crude oil) or imported as finished products,” he added.

In the meantime, there were no changes in the ex-refinery price of octane 87 and 90 gasoline from Petrojam yesterday, although diesel saw a marginal increase of 56 cents per litre.

Octane 87 and 90 remain at $101.61 and $103.27 per litre, respectively, while diesel is increased to $106.09 per litre.

Prices at the pumps are, however, higher as gasoline marketing companies and service stations add their respective mark-ups.

Petrojam announces changes in its ex-refinery gasoline prices each Wednesday, effective the following day.