By Al Edwards, Staff ReporterIN spite of high oil prices and low stock supplies in both Europe and the United States, national petroleum supplier Petrojam has managed to maintain between 2 to 4 weeks of "strategic stock" oil reserves but at continuing higher prices.
Petrojam's technical manager, Richard Jones said on Wednesday: "At Petrojam we are governed by prevailing market prices which as we all know is currently high. No sooner are stocks exhausted we have to purchase further oil supplies to replenish both our Kingston and Montego Bay refineries at escalating prices but we are nowhere near the predicament both Europe and the United States now find themselves in."
The impact has been felt at big fuel users such as the Jamaica Public Service Company, which is able to pass on much of the cost of fuel in the fuel adjustment on customers bills. Others such as Air Jamaica do not always have that ability and have to either look at adding a fuel surcharge, raise ticket prices or absorb the added fuel cost.
While several overseas airlines have done that, Air Jamaica says it has so far had to absorb much of the rising cost.
Air Jamaica's recently appointed chief financial officer, Howard Hall said: "Fuel costs account for between 13 to 15 per cent of an airlines' operating costs. This year fuel cost at Air Jamaica has risen by 63 per cent and is projected to come in this year at US$60 million as opposed to last year's figure of just US$31 million. So far we have not had to factor this into an increase in airfares but it is simply a matter of time before we do so if oil prices continue to rise." Britain is currently in crisis over the high oil price. With Brent crude costing US$34.00 per barrel(bbl), a high tax regime on fuel, compounded by half the country's 13,000 petrol stations running dry, both motorists and farmers have taken to the streets in protest.
A five day siege of refineries and fuel depots by truckers and farmers, enraged at having to pay the highest petrol prices in Europe, has throttled supplies and triggered panic buying among motorists and warnings of crisis from industry. Both France and Spain have taken to the streets in protest and the United States President, Bill Clinton said in a public address this week that there were stocks to last through out the winter but beyond that the situation could become precarious in the United States.
In April 1999 Jamaica witnessed a spate of gas riots over a tax hike placed on fuel without national debate which saw a significant rise at the petrol pumps. At the time oil prices were at their lowest for years but this time around the country is at the mercy of international market forces. Mr. Jones further added that crude oil prices in Jamaica had risen by between 55 to 58 per cent this year on last year's figure.
Local petrol pump retailer National's marketing manager, Les Melhado said: "The high oil prices had without a doubt affected volumes but there was a distinct dip in sales during the school holidays as opposed to when children went back to school. It will take a little while before a true picture of how the price affects sales comes to light.
"We at National are known for our low prices and our ability to pass on full value. It will be both interesting and challenging to watch our competitors try to keep up with us as we cut margins despite the high oil price which is expected to go even high as demand increases in the western hemisphere industrial economies during the winter months."
Shell(Jamaica) says the high oil price has definitely taken a toll and the company's commercial manager, Patrick King declared it will be holding discussions shortly with its customers (bauxite companies and light industries) " re margins and will attempt to keep prices competitive."
Mr. Jones of Petrojam noted that many American airlines had now added a surcharge as a result of the current oil price scenario. However, Air Jamaica has so far avoided taking such measures.
