MOTORISTS should expect to pay even more for gas, say analysts.

The prices of e10 87 and e10 90 gasoline have both risen dramatically by some $7 since the start of the year, selling at the refinery for $101.68 and $103.33 respectively last week, while automotive diesel oil has risen by approximately $5 over the same period, bringing the cost to $105.08 per litre. Marketing companies and service stations add their own markups to those prices.

Higher pump prices are driven largely by rising oil prices, which are nearly US$107 a barrel, having jumped by eight per cent year to date.

It is a harsh development that is battering an already weak consumer market in Jamaica. What’s worse is that the outlook appears even gloomier.

“The indicators are terrible,” declared Jamaica Gasolene Retailers Association (JGRA) president Trevor Heaven.

Heaven lists the embargo against Iran and fears of a military conflict in that region as being among the biggest factors that will drive oil, and subsequently gasoline prices upwards going forward.

“Truth be told, most of it is speculative rather than supply and demand, based on the premise that there will be some escalation in the confrontation with Iran,” he told the Business Observer.

Iran is at the centre of interruption in oil supplies from the Middle East. Iran, which produces nearly four million barrels of oil daily, recently announced halts in crude shipments to some European nations in response to sanctions imposed by Western countries opposed to the country’s nuclear programme. Against this background, the US has also been pressuring large oil importers, such as Japan, to cut imports from Iran, putting more strain on an already tight global supply.

“With the embargo on Iran, you find that there is a falloff in supply from that end which has caused an aggravation in the existing inventories,” explained the JGRA president.

Financial analyst Dennis Chung said he is expecting oil prices, and by extension gasoline prices, to increase in the medium term. In addition to the continuing geo- political issues, he said recovering global economies will put further pressures on oil supplies.

“As the economies globally continue, demand will increase relative to supply until more fuel sources come on stream,” said Chung.

Opposition Spokesperson for Industry, Commerce and Energy Gregory Mair last week expressed serious concerns about increasing oil prices and the negative impact it will have on the people of Jamaica. He said his concerns were based on the fact that fuel represents 60 to 70 per cent of electricity bills and motorists at the pump have seen increases in gas prices for eight weeks in a row.

Nearly 92 per cent of respondents in a current Observer online poll say they have altered their driving habits due to the rising gas prices, with most of these persons stating that they have cut back on taking long trips with their motor vehicles.

Heaven noted that current gasoline prices have surpassed the levels of 2008, when the cost of oil hit a record high of US$145. He said if some analysts’ predictions that current oil prices will shoot past that record holds true, it could mean dire consequences.

“At a time when oil was at US$145, the price at the pumps were like $100 a litre… And we are now at $120 a litre,” Heaven said. “So, if you speculate and look at the projections going forward should it reach US$150 a barrel, we would be

in trouble.”