MARGINS and multinationals are to blame for the slower pass-through of oil prices at the pumps, according to Trevor Heaven, former president of the Jamaica Gasoline Retailers Association (JGRA).

Prices at the local pumps are falling at half the pace of global oil prices.

“There is always going to be a lag behind the finished product and the raw crude… but it should follow that as prices fall that prices at the pumps should also fall, but it won’t fall immediately,” Heaven told the Jamaica Observer in a recent interview.

Crude oil dropped well over 20 per cent since July, but prices at the pumps are half that reduction.

Heaven later added the margins are at times influenced by multinational marketing companies rather than the service stations.

“There are a lot of intangibles and inputs of the total finished price. For instance, production costs, efficiency at the refineries,” he said. “There are so many inputs and players that it is difficult to pinpoint where the source of this problem lies.”

The popular 87 octane gasoline dipped 9.8 per cent from $125.80 to $113.55 between July and October 23 across the island’s service stations, latest official data indicate. Over the same period, crude oil prices per barrel dipped from US$103 to US$82.80 or 20.2 per cent.

The Business Observer sought to determine whether consumers are being treated unfairly.

It’s too early to say, according to the Consumer Affairs Commission (CAC), which conducts a monthly petrol price survey among 202 gas stations in Jamaica. The survey compares prices at the pumps with the prices at the government refinery, Petrojam. Consequently, the CAC, in a series of e-mailed conversations, described the Business Observer’s analysis as misleading to directly compare global oil price movements with prices at the local pumps.

“The suggestion made is misleading: although world oil prices have fallen 20.29 per cent and pump prices have actually fallen 7.02 per cent. But the price(s) at the pumps are reflections of the costs retailers experience. Retailers do not sell oil, they sell refined oil purchased from Petrojam. This means pump prices can only reasonably be compared to ex-refinery prices. Ex-refinery prices for that period have fallen 9.8 per cent, while pump prices for 87 have fallen 7.02 per cent. The difference is very small, and reasonable within the industry,” Elroy Galbraith, research officer/economist at CAC, said in an e-mailed response.

“The concluding paragraph paints a misleading picture, as the CAC report notes that although this is the case, it is too early to say whether consumers are being treated unfairly. In addition, if retailers were to adjust prices, consumers would not be saving much more. In fact, given the realities of the industry, fair savings are being made on the part of the consumers.”

According to the latest official data, the popular 87 octane gasoline dipped 9.8 per cent from $125.80 to $113.55 between July and October 23 across the island’s service stations.