Petrojam’s revised pricing mechanism takes effect tomorrow

Petrojam’s revised pricing mechanism takes effect tomorrow capping the maximum pass-through of price increases or decreases on automotive diesel oil and ultra-low-sulphur diesel at $12.50.

The company says the tiered price movement structure is designed to bolster Jamaica’s energy security and is in direct response to rapid and unpredictable changes in the global energy market.

It’s designed to strengthen the company’s ability to confront shocks, disruptions and crises in the global oil market.

Petrojam in a statement says since the latest round of price volatility brought on by the US-Israel war on Iran in late February, the former pricing regime saw the company absorbing up to $21.67 per litre of the full average increase of $59.30 per litre on transport fuels up to the end of May.

It says the absorption, cost the company almost $US22.7 million or $J3.6 billion over the three-month period; it also restricted Petrojam’s ability to respond to higher replacement costs for crude oil and finished petroleum products.

Under the revised pricing tiers, the maximum pass-through of price increases or decreases on automotive diesel oil and ultra-low-sulphur diesel will be capped at $12.50 effective tomorrow Thursday June 11.

According to Petrojam, the adjustment will bring ex-refinery prices into closer alignment with price changes in the benchmark US Gulf Coast reference.

Importantly, Petrojam’s states that its revised pricing tiers continue to protect the public by preventing full, immediate pass-through of extreme price shocks.

Petrojam’s Manager of Communications Elon Parkinson explains that the revised regime delivers proportionality by ensuring that major market shocks are met with equal controlled responses locally.

As such it guarantees balance by making sure that the movements apply whether prices are increasing or decreasing.

Dealers and marketing companies will continue to add their respective mark-ups to determine retail prices.