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Oil prices are crashing - Why is the Jamaican Gas Pump prices still hurting???

Oil Prices are falling but gasoline prices at the pumps and electricity prices are not following suit in Jamaica. Why? Why is gas and electricity prices in Jamaica still high? The simple explanation is that of the exchange rate. Jamaican to  US dollar exchange rate has been on a steady and continuous upward trend as the chart shows in the graphic below. If it were not for the exchange rate the gas and electricity prices might have fallen at relatively the same rate as world oil prices.
Oil price and exchange rate relation to energy cost in Jamaica.
But should anyone wish to try to understand the connection between oil prices and the cost of gas or electricity in Jamaica the information in the chart above may help alongside the explanation below. So, first there is the world oil price. This has to be bought with US dollars which continues to be more expensive on a daily basis thanks to the devaluing Jamaican dollar. The Jamaican dollar value of oil as a result has been increasing exponentially (See the chart highlighted in blue with the black line). This crude oil is then broken down into its various components by the refinery. Some is used for the gas to fuel cars some is used for fuel oil to generate electricity. The result of all this is the cost delivered to you by the gas station or the electricity supplier. The chart below show a comparison of the World oil price and the cost of gas in Jamaica and illustrates how the increase in the exchange rate has spread the correlating cost for both products.


              Colidez  Sweet Music Jamaica  Tech Life


Chart comparing World Oil price to Gas price in Jamaica




While I would love the gas pumps and the electricity providers to reflect the same price reduction as seen in the world oil prices its clear that a devalued Jamaican dollar will keep prices up. Maybe Jamaican should lobby the Government to fix the exchange rate. Or maybe not.


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              Colidez  Sweet Music Jamaica  Tech Life




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