Gov’t to weigh movement restrictions as fuel costs surge – Vaz

The Government is exploring options to get Jamaicans to conserve fuel amid rising global prices, with Energy and Transport Minister Daryl Vaz signalling that COVID-19-style movement restrictions could be considered.

No decision has been made, and the matter is to go before Cabinet for discussion.

The move comes as Vaz indicated that Petrojam has absorbed losses of $11.8 billion over the past four weeks while cushioning the impact of higher oil prices driven by the ongoing war in the Middle East.

Vaz described the losses as “unaffordable and unsustainable,” warning that prices will continue to rise for as long as the conflict persists.

He urged Jamaicans to begin conserving fuel immediately.

“We are going to see increases as long as this war continues. We will continue to do what we can, but it is important that you understand that you need to conserve starting today,” he said.

“The Government is going to have to look at policies to limit movement, especially transportation. I don’t know if we can go back to a COVID-19 hybrid version of working from home, but something has to happen,” he added.

“The level of traffic that I’m seeing on the road doesn’t show that anybody realises that there is a war and that fuel prices will continue to go up.”

Vaz noted that oil prices have climbed from about US$70 per barrel before the conflict to an average of US$100, reflecting volatility in the global market.

He indicated that between March 12 and April 8, transport fuel prices increased by an average of $49.20 per litre.

He said of that amount, only $18 was passed on to consumers under the Government’s pricing cap at Petrojam, which limits adjustments to $4.50 per litre on increases or decreases.

A revision of the $4.50 cap has been proposed to Cabinet as part of a new tiered pricing mechanism aimed at reducing losses while maintaining consumer protection.

“While the current mechanism has been effective in cushioning consumers, it has resulted in significant financial losses by Petrojam,” Vaz said, citing the $11.8 billion.

“That is, in fact, two-thirds of this budget year’s revenue measures. You have to understand the magnitude of the impact of the war on Jamaica. This level of support is not sustainable indefinitely, especially in a prolonged high-price environment.”

He said the proposed system would likely introduce multiple pricing tiers to allow greater flexibility in responding to global market shifts.

“It means that we will probably have three different tiers of caps that reflect what is happening in the market. And if prices are changing weekly, it means we can adjust on a weekly basis,” he added.

“Let me be blatantly, truthfully upfront, in your face, the Government of Jamaica cannot stomach a $11.8 billion with all of what we have to do and the contending priorities. And anybody who tell you any different, I’m sure they will after this press conference, rubbish. No government, in a situation like this, can sustain that,” Vaz added as he urged businesses and ordinary citizens to conserve fuel.

Added Vaz: "My words to you Jamaica definitively is you are going to see increases as long as this (war) continues. We will do what we can do but it is important that you do what you need to do to understand that you need to conserve."

- Corey Robinson

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