For a country that gets its oil at preferential prices, gas prices in Jordan has been too high. yesterday the government announced its monthly price list of various petroleum products to Jordanians' dismay. Firstly, the mechanism of adjusting prices has no clear methodology nor is it fair. The government raises prices in timely manner when world prices rise, but takes its time when prices are on the decline. Secondly, the high prices paid by Jordanians reflect the deeply rooted inefficiency in government and/or the well "oiled" pockets of those involved in the sourcing and distribution of oil and its byproducts.
The new price of 455 fils/liter (90 octane) @ .709 fils per dollar exchange rate means that a gallon of gas in Jordan costs Jordanians $2.43.
In the US, the cost of one gallon of gas is averaging around $2.63 these days. These 20¢ are supposed to cover transportation costs of oil coming into the US from as far as Saudi Arabia, the high labor costs at American refineries, high costs of transporting refined products from refinery to gas stations, substantial taxes paid on gas at the pump, and many other costs incurred by the gas station, such as rent, labor, licenses and fees. All that is supposed to cover the extra 20¢ Americans pay more than that paid by Jordanians.
there is one giant invisible hand in the Jordanian market.
oh, and a huge pocket.
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يا غنماتي، ماع ماع
شو أطعميكوا. ماع ماع
سم يهريكوا
يا غنماتي، ماع ماع
شو أطعميكوا. ماع ماع
سم يهريكوا
5 ►I charge thee, speak!:
إذا بدنا نحسب كل اشي زي هيك معناتو رح نعيش عل حبوب الضغط.. و كمان دكتور نفساني لكل مواطن ..
Although i agree that the prices of petrol products are extremely high when they shouldn't be, i don't believe this method of calculation is correct. Why measure against prices in USA not Europe for example ? Oil is more expensive for European countries, no ?
While I agree with many of your posts, this is not one of them. An 18% reduction isn't that big... especially considering the much, much better deal Jordan used to enjoy on Iraqi oil back before the war, when it was practically free. In the 5 years following the war, Jordan was paying many times more for its oil than it used to, and only now have things eased a bit. This is definitely represented in the drop in prices at gas stations, which only last summer were at 85 piasters per litre for 97 octane.
If they were to drop prices more, what do you think the reaction would be if prices were to increase dramatically again? Oil is much lower than it used to be but if you look at England for example, they are still paying around £1/litre, with a very small drop in the price since last year.
This is because if prices go up again (and they sure as hell will), consumers will be much more adjusted to the price of gas and the effects will be much smaller than if the prices were to go all the way down and then back up again.
Za3tar and AJ,
oil as a commodity has a market set price that is the same all over the world. discrepancies in gasoline prices are due to taxes imposed by governments. as seen the graph, the base price is very similar in all countries and the difference is probably related to transportation and labor costs. But, the big difference is in taxes.
Jordan's geographic proximity and preferential prices ought to translate into much lower prices for the final consumer. However, that's not the case.
as per the government's mechanism in adjusting prices on monthly bases with no clear methodology, prices should be set by the seller and not the government and to all more sellers to enter the market. Supply and demand is the only way to set the price locally as it is set in global markets.
jano,
these comparisons are important for they provide consumers withm ore reasons to question the system. جمعية حماية المستهلك focuses on the neighborhood's butcher and avoids going after the main force that shouldn't be: the government.
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