Wednesday, 12 November 2014

Manufacturers, Follow Jamaica Public Service Company,s Lead

The recent news by the Jamaica Public Service Company (JPS) that customers will see a reduction of approximately 8.4% in their November light bill is welcome news for the Jamaican consumer. This pending reduction in electricity bill is made possible due to the fall of world oil prices. The collapse of world oil prices is a result of an oversupply of the community due largely in part that supply from the United States of America unconventional fields is rising faster than global demand. Additionally, increase in output mainly from Saudi Arabia and Kuwait both members of the Organization of Petroleum Exporting Countries (OPEC) have contributed to a glut on the market. According to some reports, both Kuwait and Saudi Arabia have indicated an unwillingness to reduce output. It is therefore, possible to see even further reduction of world oil prices. 
While the news from the Jamaica Public Service Company (JPS) is most timely, coming just in time for Christmas,we must ask ourselves why is it that the Jamaican consumer is not benefitting more from lower prices of goods and services due to the decrease of world oil prices.  Why is it that the Jamaican consumer did not we see a reduction in their October light bill? After all, world oil prices has been on the decline for quite some time.
A barrel of oil is at its lowest since October 2010 at around $81 per barrel. Global oil consumption is currently at 90 million barrels daily driven mainly by demand for transportation fuels. 
Given the fact that electricity cost plays a major role in Jamaica’s manufacturing sector, we should by now be reaping some lower cost, as consumers, as Brent crude oil has been falling over the weeks. 
Interestingly, when world oil prices is on the increase the manufacturing sector does not wait a minute before they pass on the consumer the higher cost for goods and services.
It is time the Jamaican manufacturers pass on to consumers whatever price reduction accrued from lower world oil prices. This will undoubtedly ease the economic burden on consumers and provide some temporary respite; however, may be its possible that some manufacturers are instead waiting for the price of oil to increase once again.  Let us for once think about the poor consumer instead of the bottom line.
Wayne Campbell
waykam@yahoo.com