Oil rose for a second day on the back of the Federal Reserve‘s aggressive plan to boost the US economy. More gains are expected, but that might not translate into a spike in prices at the gas station.

After earlier topping US$100 for the first time since May, benchmark oil was up 72 cents to US$99.03 per barrel in midday trading in New York.

Analysts say the Fed’s plan to keep interest rates at extraordinarily low rates into 2015 gives investors the incentive to put their money into riskier assets like stocks and commodities. The expectation that the Fed’s moves will help the economy should also boost oil prices because demand for energy should pick up.

But the higher oil and other commodities rise, the greater the chance they’ll curtail consumer spending in an economy where unemployment is stuck above 8 per cent. That’s why analysts think the gains should be limited.

“Higher commodity prices are going to put a dent in spending as they give consumers pause when they’re spending more at the (grocery) store or the gas pump,” said Andrew Lipow of Lipow Oil Associates in Houston.

An increase in the price of oil usually means a rise in pump prices. But fundamentals favor a decline in the price of gasoline, said Tom Kloza, chief oil analyst at Oil Price Information Service. The end of summer driving season means less demand for gas. And refiners are about to switch to making winter blends, which are cheaper than summer blends formulated to cut down on pollutants.

Kloza thinks gas might rise a penny or two from its current average of US$3.87 per gallon, but should decline during the period between late September and Thanksgiving. He sees gasoline falling to between US$3.50 and US$3.75 per gallon in October.

The wild card for oil is the unfolding unrest in the oil-rich Middle East. Protesters angry over an anti-Muslim film ridiculing the Prophet Muhammad began assaulting a string of US embassies in the region four days ago.

Brent crude, which is used to price a number of international types of oil, rose 74 cents to US$116.62 in London. Kloza said an escalation in the Middle East situation could push Brent up as high as US$125 per barrel and the US benchmark as high as US$120. That would limit the decline in gasoline prices, he said.

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JAMAICA is blessed to be refreshed and cooled all year by winds mostly coming in from the Caribbean Sea. Yet we make virtually no use of the potential for wind generated energy.

Today, Jamaica gets 95 per cent of its energy from imported oil and 0.1 per cent from wind. Wind-generated energy accounts for less than charcoal and fuel-wood, which account respectively for 0.6 per cent and 1.9 per cent. Solar energy our most abundant and inexhaustible energy source provides mostly hot water in some hotels, hospitals and private homes. Solar energy helps in a small way to save on electricity and imported oil.

This is almost exactly where the country was when the first oil crisis of the early 1970s tripled the bill for imported oil in a one-year period, terminating the economic growth of the 1960s and igniting the implosion of the Jamaican economy from which it has never recovered.

The need to finance the oil import bill which kept escalating with each rapacious increase by the merciless oil producers is the root cause of our external debt. Given the dependence on oil and the cost to the economy it was reasonable to expect all the Governments since the mid 1970s to make reducing dependence on oil a priority.

If diversification from oil to alternative energy sources was a priority, nothing meaningful has been done about it. We contend that the objective of developing alternative energy sources has never been seriously and consistently pursued. The explanation for this manifest failure lies in the willingness for self-delusion by means of hoped-for panaceas.

The first panacea was that there is oil and/or gas in the offshore waters of Jamaica. This figment of optimistic geologists has made the rounds several times. Next panacea was coal, which is plentiful and relatively cheap from many sources across the world. This has been mooted ad nauseam with a different proposed supplier each time ranging from Colombia to China. The latest miracle solution is LNG which members of the Portia Simpson Miller Administration seem disagree on in their public statements.

While we are waiting to get to the long Promised Land, Jamaica must move aggressively on two alternative sources of energy which are local and inexhaustible. These are solar and wind; with the former as a means of saving on imported oil and the latter as a means of reducing dependence on oil and reducing the cost of generating electricity. No one disagrees that lower electricity costs would be good for consumers, producers and exporters.

To date, Jamaica has developed only one of several coastal sites suitable for wind-generated energy. This successful Wigton Windfarm is a wholly-owned subsidiary of the Petroleum Corporation of Jamaica located in Manchester, a parish with two other suitable but undeveloped sites.

We suggested that the Members of Parliament give up generating hot air in Gordon House and take a trip in a single bus (avoid 63 SUVs making the trip), tour the Wigton Windfarm and learn what the cool breeze of the Caribbean can do. If they understand the benefits of wind we will, hopefully, have less hot air on energy, less energy devoted to ventilating and more energy put into implementation.

Jamaica is a land with limited wood and water, but it is a land of unlimited wind and sun. The cool breeze and the warm sun are not just there for tourists.

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Petroleum Company of Jamaica (Petcom) has entered into a dealership arrangement with the family of the late Lloyd ‘LG’ Brown to operate a service station at the intersection of Dunrobin and Constant Spring roads in St Andrew.

It’s part of the state-owned gasoline retailer’s strategy to procure a greater share of the overall petroleum retail market of which it now controls only 12 per cent. Petcom increases its service station chain to 29 with the deal.

Acquisition of the former LG Service Station puts Petcom in a position to profit at one of the major intersections in St Andrew (Photo: Naphtali Junior)

“Petcom is currently on a drive to expand our service station network and therefore we have been actively looking for strategic locations, particularly in the Corporate Area,” said the company’s general manager, Courtney Lawes.

“Our new location, Petcom Dunrobin, is not only a popular service station but it has the additional advantage of being situated in a high-traffic area,” said Lawes.

Government figures show that three major multinational oil companies

CARICOM-member countries have agreed to work together to ensure adequate support for the region’s renewable energy push.

The commitment came out of a meeting held last Friday at the conclusion of a two-day renewable energy summit in the Republic of Malta, organised by the International Renewable Energy Agency (IRENA).

State minister in the ministry of Science, Technology, Energy and Mining, Julian Robinson, who was Jamaica’s representative at the summit, called the early-morning meeting of CARICOM member states in attendance, to examine how the region could interact with entities like IRENA to source assistance, grants, and other financial instruments, “to facilitate joined-up projects rather than compete head on for instruments from the same global financial pie”.

Robinson pointed out, many of the smaller countries lose out to the larger and better resourced ones when trying to source financial assistance.

According to Robinson, arising from the meeting, the eight CARICOM countries represented agreed in principle to work together to complete a renewable energy assessment within the region.

He said the members also pledged to “examine the possibilities of harmonising regulations and legislative framework for renewables, which will allow all investors to invest within the region in complement, not competition”.

They have also agreed to carry out work with regulators on renewable energy initiatives.

The group also resolved to increase the CARICOM presence in the IRENA. Only two countries, Antigua and Barbuda, and Grenada, are currently members.

The eight CARICOM countries represented at the Malta summit were Jamaica, Antigua and Barbuda, Belize, Barbados, Grenada, St Vincent and the Grenadines, Suriname, and Dominica.

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President and CEO of JPS, Kelly A. Tomblin.-Rudolph Brown/Photographer
President and CEO of JPS, Kelly A. Tomblin.-Rudolph Brown/Photographer

The much maligned and criticised Jamaica Public Service Company (JPS) could be the one to save the Government‘s floundering liquefied natural gas (LNG) project, which will bring cheaper electricity to Jamaicans.

Having stuck to the letter of the law and prevented the parent company of the JPS, Marubeni Corporation, from bidding to supply LNG to Jamaica, the Government now seems ready to eat humble pie and beg the firm for help.

Marubeni had wanted to submit a bid to supply the LNG to Jamaica but was disqualified after it arrived minutes after the 5 p.m. deadline.

However, with the qualified bidders offering prices that would not lead to any appreciable decline in the cost of electricity to Jamaicans, it appears negotiations are set to be initiated with Marubeni.

“The prices quoted by the bidders are much higher than Jamaica can pay and would not attract the JPS or the bauxite companies,” a source close to the talks told

The Ministry of Science Technology, Energy and Mining (MSTEM) is mulling a change in how gas stations are licensed.

Out of a meeting between sector interests and Minister Phillip Paulwell on Monday, MSTEM said in a statement that the current licensing system may be contributing to the low margins that service station operators are now experiencing.

“On the issue concerning the inadequate profit margins being realised by the retailers, it was agreed that the number of service stations and their proximity to each other is contributing to the low margins,” the ministry said.

“Currently, the service stations are licensed by the Resident Magistrate courts and not by the ministry. The minister updated the meeting of the progress towards a one-stop-shop for licensing and registration of sector participants will help to resolve this problem.”

Monday’s meeting – which included representatives from the Jamaica Gasolene Retailers Association, and the National Workers Union, which represents tanker drivers and petroleum haulage contractors – centred on discussions about averting a shutdown of the petroleum sector.

MSTEM said going forward, the bi-monthly Petroleum Advisory Council would resume, starting in October.

business@gleanerjm.com

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A Texaco gas station - file photo.
A Texaco gas station – file photo.

Debbie-Ann Wright, News Editor
The Gleaner/Power106 News Centre

The Energy Ministry is looking to overhaul the licensing and registration process for gas stations as it seeks to address competitiveness in the sector.

In recent weeks, gasoline retailers have been complaining of dwindling profits with some gas stations even being forced to close.

In a release yesterday, the energy ministry stated that the number of service stations and their proximity to each other was contributing to the low margins.

It said currently the service stations are licensed by the Resident Magistrate Courts and not by the Ministry.

Energy minister Paulwell said a one-stop-shop for licensing and registration of sector participants being worked on by the government will help to resolve this problem.

President of the Jamaica gasoline Retailers