By Claude Mills, Staff Reporter
Motorists need to watch their weekly fuel intake and be more discerning of gas prices. File
AS THE conflict in Iraq intensifies and drags out into a prolonged war, many Jamaicans have been wondering just what sort of effect Operation Iraqi Freedom will have on local gas prices?
Economic experts claim that a massive run-up in prices is unexpected for gas unless war-panic precipitates price-gouging and shortages at the island's gas pumps.
Petrojam prices are based on a comparison with the least-cost alternative prices, which are the United States Gulf reference prices, these prices are the lowest market prices closest to Jamaica, experts say.
The Gulf prices are affected by demand and supply and where there is a greater demand in the US market for gasolene, prices might remain high.
"Oil prices went down every day during the first week of the war, but as of March 24, when the Iraqis fought back on Sunday, prices went up by $1.47, and it has gone up by 60 cents today (March 25). We expect it to stay in the region of US$30 per barrel or higher because of the growing uncertainty about the war," Dr. Raymond Wright, group manager of Petroleum Corporation of Jamaica (PCJ) said.
"It is clear that this war will not be over in only three weeks, three months and it may even continue beyond that," Dr. Wright said.
But even before the outbreak of war, motor vehicle owners in Jamaica have been shelling out bigger bucks at service stations across the island.
"The increase is a 37 per cent in the price of petrol. The most obvious change in consumption has been a switch from premium 90 to 87, but most consumers just buy according to their pockets, so instead of spending $1,000, they will just spend $200 or $500 depending on their pockets," L.G. Brown, president of the Jamaica Gasolene Retailers' Association (JGRA) said.
According to figures released by the PCJ on February 6, the price of premium gas stood at $28.45 while unleaded gas stood at $26.35, and as of March 6, , premium gas sold for $30.02 while unleaded gas sold for $27.93.
At average prices today, the car owner will shell out in excess of $1,500 to fill a regular 10 to 12-gallon tank, or $3,500 for a 20-gallon tank of an SUV.
"If they switch to 87 octane, they have saved on average, $100 each time they go to a gas station instead of buying premium gas," Mr. Brown noted.
The octane number is a measure of how much compression of the petrol/air mixture is possible in a car engine before engine 'knocking' occurs.
In January 2000, following the removal of lead as a performance enhancer in gasoline, Petrojam introduced two octane levels, 87 (R+M)/2 Octane and 90 Octane, to meet the gasoline market demand. Research showed that 95 per cent of the vehicles on the Jamaican roads required 87 Octane fuel, while the 90 Octane rating was more appropriate for high-performance cars.
Japanese vehicles account for the majority of the approximately 400,000-strong motor vehicle fleet on the Jamaican roads, experts maintain that 87 Octane fuel is the recommended grade of fuel for these vehicles.
"The cars that ideally need the premium 90 octane gas fuels are the Mercedes, the BMW, Porsche, Land Cruisers and other top-of-the-line vehicles," Mr. Brown said.
So with this in mind, why do so many motorists insist on buying 90 gasolene when it would suffice to buy 87 octane?
"When I am strapped for cash, I buy 87, but I prefer to buy 90 because the gas station attendants kinda expect you to buy the premium. I like to impress girls by driving into the gas station and saying "fill her up". Nowadays, with all the increases in price, and the war, I am seriously thinking about buying 87 all the time," Kenrick Roberts, a 22-year-old computer technician told Flair.
In a special Report issued by OXY-FUEL NEWS, Honda recommends 87 Octane fuel for all its models, with the exception of the Prelude S, which, the company says, needs a minimum 86 Octane fuel. Isuzu, in the same report, boasted that its cars are efficient in high altitude areas, with a minimum 85 Octane gasoline.
In the meantime, retailers are bracing for uncertainty in the sector.
"Things are looking pretty grim for retailers, it takes more money to buy the same amount, and with a higher price at the pumps, there is a risk that there will be an increase in illegal operators who can sell at a cheaper price.," Mr. Brown said.
Also, you can have a situation where members of the public start to store petroleum in their homes, and that could be a potentially disastrous situation, he added.
Over the last couple of years, the market positions of the three international oil companies Esso, Shell and Texaco have been steadily eroded by the new and local market entrants such as Petcom, Unipet, National, Epping, Jampet and Cool Oasis.
"The local marketing companies have played an instrumental role in keeping oil prices down," Stephen Sterling of the PCJ, said.
