By McPherse Thompson,
Staff Reporter
THE EX-REFINERY price of cooking gas distributed by Petrojam, the state-owned oil refinery, has risen by almost 20 per cent over the last three weeks as a direct result of higher benchmark prices because of the high demand arising from the cold weather in the United States.
The price rise means that Petrojam has increased Liquid Petroleum Gas (LPG) by more than 320 per cent within the last two years, moving from about $4.36 per litre in January 1999 to $14.03 yesterday.
At least one cooking gas marketing company, Industrial Gases Limited (IGL), said that while it was left no choice but to pass on the increase to consumers, the company would do so without adding a mark-up because of the magnitude of the increase.
In a release yesterday, Petrojam said the ex-refinery price of LPG was increased to $11.40 per litre on December 14, to $11.80 on December 21, and to $14.03 yesterday.
Petrojam said the increases resulted directly from higher US Gulf prices due to the high demand for natural gas and LPG because of the severe winter being experienced in the United States.
The oil refinery noted that "on the other hand, the ex-refinery prices of all other petroleum products have been going down over the same period as a result of reduced driving demand arising from the severe winter."
Cooking gas distributors yesterday said with mark ups, consumers are likely to see the prices of cylinders moving from between $625 and $680 for a 30-lb. cylinder to about $800, while the cost of a 100-lb. cylinder would likely move from just over $2,000 to more than $2,500.
Contacted yesterday, Stephen MacKay, managing director of IGL, said that while they were unhappy with the magnitude of the increase, and happy that it came after Christmas, the increase was understandable from the standpoint of increases in shipping costs and the higher US Gulf prices.
Asked how the latest increase would affect business, Mr. MacKay said he "would expect to see a loss in the level of sales" as consumers sought alternative sources of fuel. However, he made it clear that "I am not happy about the timing and the magnitude of the price increases."
Petrojam did not attribute an increase in shipping costs to the increases in LPG over the last three weeks, and, according to operations manager, Christopher Chin Fatt, "I don't think shipping costs have increased to a level to warrant the increase in LPG costs during the past three weeks."
Mr. Chin Fatt would not be definitive about the factors which led to a more than 300 per cent increase in LPG price since January 1999, but recalled that oil prices started skyrocketing around mid-1999 and that could be the reason for that level of increase.
Tony Berkhout, Shell Jamaica's LPG general manager, said they understood the need to raise LPG prices which was due in part to the harsh winter in both Northern Europe and the United States.
"However, a rise of over 20 per cent would have a substantial impact on the Jamaican public and I do feel that both Petrojam and the Ministry of Energy and Mining should have issued a release explaining the rationale for such an increase, so that people know why this is being done," he told The Gleaner.
The LPG Dealers' Association said it would refuse to take LPG products until a suitable explanation was given as to why the price has been hiked by over 20 per cent.
Shell, the biggest petroleum retailer in the island, says it would pass on the increase without mark ups to both dealers and distributors and was hopeful that they in turn would not add mark ups and margins to their prices.
A Reuters news agency report yesterday said that American households turned up the thermostat this week amid some of the lowest winter temperatures in three years, and forecasters predicted that the chill would last for at least another 10 days.
