Oil prices hit all time low

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Ship in the dock. Courtesy of Tom Fisk

Motorists can continue to breathe a sigh of relief at the pumps this week as gas prices have dropped $4.50 for the fourth consecutive week. A litre of E-87 will sell for $167.16 and E-90 for $171.14, the lowest prices have been since January. Diesel will go for $212.59 per litre and ULSD for $220.52 per litre, the lowest prices have been since June. Although gas retailers will add their respective markups, gas prices are at an all-time low. The already existing energy crisis was intensified this year following Russia’s invasion of Ukraine. Prices have now returned to what they were pre-invasion.

The drop in gas prices comes at the time when Jamaicans are still facing the issue of inflation. The most recent Consumer Product Index (CPI) report indicated that there was a 1.5 per cent increase in the index for October. This increase was attributed to higher electricity, water and sewage rates as well as higher costs for food and alcoholic beverages. However, on a positive note, the overall inflation rate was buffered by a 0.3 per cent decrease in petrol prices.

Analysts say crude oil prices have continued to go down as the demand for energy has been on the decline. China’s most recent COVID-19 lockdowns will have a direct effect on demand as the world’s fastest growing economy will have to slow down production, analysts say. According to a November 2022 report on the oil market by the International Energy Agency (IEA), “China’s persistently weak economy, Europe’s energy crisis, burgeoning product cracks and the strong US dollar are all weighing heavily on [energy] consumption”, hence, the decrease in the demand for oil.

Gas retailers are welcoming the drop in prices as earnings took a plunge for many. One Mandeville gas retailer anticipates that earnings will go up for this year and well into the new year once gas prices continue to go down. “Before the gas prices went down, some of customers had gone to other gas stations. Since the constant decrease, we have some of them returning to us and we see a slight increase in our sales”, the retailer said. The previous drop in sales for the retailer sometimes made it difficult to purchase fuel for the station to replenish supplies.

Geoffrey Wilson, a motorist said the decrease in gas prices have come at the perfect time. “You know, with all the expenses that the Christmas season comes with, it feels good to know that I can pay a bit less for gas and put the money I’m going to be saving somewhere else. At one point I was wondering if the prices were ever going to go down”, Wilson said.

It is anticipated that prices will continue to fall in the weeks ahead.

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