General Information

Taxation, JPS & the Energy Policy

Posted on December 3, 2010. Filed under: General Information |

With very few exceptions, whenever the Jamaica Public Service comes in the news, the public seems to get the fecal end of the stick.

I think it’s such an irony that the name is “Jamaica Public Service”.

I know most people would say the JPS has done Jamaica a great disservice.

I dare say the JPS doesn’t act alone. Successive administrations have contributed to this current situation,  pardon the pun. The governments have watched, as voyeurs do, while someone gets screwed.

I know, I know, the country is strapped for cash, that’s nothing new. These days though, it has become painfully obvious that taxation seems to be the quick fix for budget shortfalls. Dear Mr. Shaw, kindly note, if we tax everything but cannot increase compliance and collection, then we’ll never get out of this mess, but I digress.

Recently the government introduced a tax on JPS reconnection fees. I am yet to be convinced how this makes any real sense. If it is that so many people have to be paying reconnection fees, it’s a clear sign that persons are having difficulty paying their bills on time. Why would you want to capitalise on what is already a difficult situation? On the other hand most persons tend not to try conserving electricity so their bills are high and in many cases unbearable. I’ve been successful at keeping my monthly JPS bill under $1600, believe it or not.

Earlier this year the JPS requested an increase in its rates and the Office of Utilities Regulation granted the request (albeit, less than what JPS requested). The request was completely legal based on the contract under which the JPS operates in Jamaica. The next increase request is contractually due in 2015 (I think), so we have a little time to save money for that request.

I think it is time Jamaica and Jamaicans focus on the need for an alternative and cheaper source of energy. Jamica is the land of wood, water along with lotsa  sun and wind. Can the Ministry of Energy & Mining explain why we have not invested HEAVILY in solar or wind-energy generation?

We have sun for most of the 365 days of the year, so I can’t wrap my mind around why successive administrations have neglected to make the necessary policy changes that would encourage the use of solar or wind energy to provide MOST or even 50% of Jamaica’s energy needs.

We have to import oil and it pay for it with foreign exchange. Buying oil to produce energy is one of Jamaica’s biggest spends annually. If we use solar and wind technology we can cut the nation’s energy bill significantly. WE MUST CUT OUR DEPENDENCE ON OIL! The savings on oil could be used to pay international debt and more importantly, pay our teachers, nurses, police and other civil servants.

Why is the duty so high on the  importation of solar panels and on the equipment used in harnessing and storing solar power?  The government needs to address this matter and encourage businesses and families to switch to solar and wind technology to ease the strain on the country’s energy bill.

Create some type of incentive scheme for companies and families which invest in the technology which will reduce the country’s energy bill. On its own the government should move in a direction which would make the need for a an oil-based energy creation entity like the JPS obsolete. I certainly wouldn’t miss the JPS.

I hope the “National Energy Policy” will address our energy situation in a way which capitalises on our natural resources. Additionally, it must ensure that the cost of energy to the consumer is much lower than what currently obtains.

Until that Energy Policy is enacted, I appeal to the government – please make it easier for businesses and families that desire to use renewable energy sources like wind, solar and biofuels.

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Jamaican gas prices and Petrojam

Posted on November 17, 2010. Filed under: General Information |

For almost a year now I’ve posted a #WeeklyGasUpdate every Wednesday on my Facebook and Twitter. I note the difference in people’s reaction to the prices. A decrease rarely gets a comment/response, but when there’s an increase then people get all pissed and start cursing Petrojam and the government.

I’ve been asked if I work with Petrojam, the answer is NO!

But I figure if they’re not doing the public education that needs to take place, I’ll fill that gap in my own little way.

As a public service, let me breakdown how this whole gas price thing goes

Poor Petrojam

Petrojam is a limited liability company; jointly owned by PDVCaribe, a subsidiary of Petróleos de Venezuela (PDVSA) and the Petroleum Corporation of Jamaica (PCJ). The PCJ is a statutory body created and wholly owned by the Government of Jamaica.

The General Manager is responsible for daily management of Jamaica’s only petroleum refinery; however the ultimate internal authority is the Board of Directors. The Board is comprised of an equal number of Venezuelan and Jamaican Directors.

Petrojam was established in 1982 when the Government of Jamaica purchased the Esso Kingston Refinery, which had been built, and operated by Esso since March 1964. In 2006 the Government of Jamaica sold 49% of its shares to PDVCaribe.

What Causes High Oil Prices?

Like most of the things we buy, oil prices are affected by supply and demand. More demand, drives higher prices. Demand ebbs and flows depending on time of year and the various consumption habits of the public. However, oil prices are also affected by “oil price futures”, which are traded on the commodities exchange. These prices fluctuate daily, depending on what investors think the price of oil will be going forward.

What/Who Affects Oil Supply?

The Organization of the Petroleum Exporting Countries (OPEC) is a cartel of twelve developing countries made up of AlgeriaAngolaEcuador,IranIraqKuwaitLibyaNigeriaQatarSaudi Arabia, the United Arab Emirates, and Venezuela. OPEC produces 46% of the world’s oil. In 1960, they formed an alliance to regulate the supply, and to some extent, the price of oil. These countries realized they had a non-renewable resource. If they competed with each other, the price of oil would be so low that they would run out sooner than if oil prices were higher. OPEC’s goal is to keep the price of oil at around $70 per barrel (that’s only a goal). A higher price gives other countries the incentive to drill new fields which are too expensive to open when prices are low. Non-OPEC countries include USA, Canada, Russia, China, Norway, Brazil and others.

Oil Demand

This varies among countries. A country’s demand for oil depends on factors such as population, climate, level of development, whether it produces its own oil, transportation systems, and the size of the productive sector among others. I’m no economist, so I’m open to be corrected/updated. The U.S. uses 20% of the world’s oil. The European Union is the next biggest user, at 15%. China only uses 10%, but its use has grown rapidly. (Source: BP Statistical Review of World Energy, CIA World Factbook)

What Affects Oil Price Futures?

Oil futures, or futures contracts, are agreements to buy or sell oil at a specific date in the future at a specific price. Traders in oil futures bid on the price of oil based on what they think oil will trade at. They look at projected supply and demand to determine the price. However, if traders think the price of oil will be high, they create a self-fulfilling prophecy by bidding up oil prices. This can create high oil prices even when there is plenty of supply on hand. Once this starts, other investors will bid on oil prices just like any other commodity, such as gold, creating an “asset bubble.

Relationship between Oil Prices and Gasoline Prices

Crude oil generally accounts for 55% of the price of gasoline, while distribution and taxes influence the remaining 45%. Usually, distribution and taxes are stable, so that the change in the price of gasoline accurately reflects oil price fluctuations. Gas prices are also affected when production lines are disrupted or are down for maintenance, or when there’s a war or civil unrest or when major natural disasters occur.

Petrojam buys crude oil then sells refined gasoline to Marketing Companies like Shell, Texaco, Esso, Total, Epping and others. These companies add their respective mark-ups based on various factors, I don’t know what those are, but I figure it includes the costs to distribute the gasoline to the various gas stations from which we buy.

Additionally, Jamaicans pay 15% of the value of gasoline as an ad valorem tax, in addition to a specific tax of $16 per litre.

These gas stations are usually a part of the Jamaica Gasoline Retailers Association. Each individual gas station has its own sets of overheads and that determines what you pay at the pumps.

Knowledge and action

Remember, oil is traded daily. Petrojam does weekly updates of its prices based on how the price of crude is determined by oil price futures and OPEC. Venezuela, with whom Jamaica has an agreement, is a part of OPEC.

JGRA members and other gas retailers purchase from Marketing Companies or directly from Petrojam then add their respective mark-ups.

What we need to do is monitor the price updates from Petrojam and STOP SUPPORTING GAS STATIONS THAT ONLY INCREASE THEIR PRICES.

We need to be more efficient in our use of the commodity – CONSERVE!

Retweet or share your facebook  if this has been useful.

Follow me … … @daddycrab

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Preppin for a Hurricane

Posted on November 3, 2010. Filed under: General Information |

How to prepare for a hurricane


Get your family together and plan

Prepare your food supply

Secure your home and property

Taking inventory of your property

Special assistance

If your home is safe, stay put

What to do when the storm hits


Planning ahead

To make sure everyone knows how to respond in the event of a hurricane, you might want to convene a family meeting or meetings. Topics of discussion should include:

  • What to do about power outages.
  • How to deal with personal injuries.
  • How to turn off the water, gas and electricity at main switches.
  • What to do if you have to evacuate.
  • Where to meet and whom to contact if you get separated.

In addition, you should:

  • Post emergency telephone numbers by the telephones.
  • Teach children how and when to call 119 for help.
  • Make arrangements for your pets.

Getting your food supply ready

Have at least a three-day supply of nonperishable food on hand. Focus on high-nutrition foods that require no refrigeration, preparation or cooking and little or no water. Your foodstuffs might include:

  • Ready-to-eat canned meats, fruits, vegetables
  • Canned juices, milk, soup
  • Staples, including sugar, salt, pepper
  • High energy foods, including peanut butter, jelly, crackers, granola bars
  • Vitamins
  • Foods for infants, the elderly or people on special diets
  • Comfort/stress foods, including cookies, hard candy, instant coffee, tea

Optimally, a two-week supply of nonperishable food is recommended. Though it is unlikely that an emergency would cut off your food supply for that long, such a stockpile can relieve a great deal of inconvenience and uncertainty until services are restored. You don’t need to go out and buy unfamiliar foods to prepare an emergency food supply. You can use the canned foods, dry mixes and other staples on your cupboard shelves.

Keep canned foods in a dry place where the temperature is fairly cool. To protect boxed foods from pests and extend their shelf life, store the boxes in tightly closed cans or metal containers.

Rotate your food supply. Use foods before they go bad, and replace them with fresh supplies, dated with ink or marker. Place new items at the back of the storage area and older ones in front.

Keep a supply of cooking and eating implements that can be used in the absence of running water or electricity, including:

  • Plastic utensils, paper cups and plates
  • Manual can and bottle openers
  • Kerosene, butane and coal.

Securing your home

Board up windows or attach storm shutters. Taping windows will not prevent breakage, but will help reduce shattering.

Electric power may be off, so have a supply of extra food, especially things that can be eaten without cooking, and a hand-operated can opener.

Thoroughly clean the bathtub, jugs, bottles and cooking utensils, and fill containers with drinking water. Allow a minimum of 3 gallons of water for each person.

Check flashlights and radios. Make sure you have batteries.

Check trees and shrubbery, and remove limbs that could damage your house or utility lines.

Secure anything that might tear loose or blow away, including garbage cans, grills, potted plants, garden tools, toys, signs, porch furniture, awnings.

Do not lower the water level in your swimming pool, or it may pop out of the ground. Remove pumps from underground pits after all valves have been closed and the electricity has been shut off. If the filter pump is exposed, wrap it in a waterproof material and tie it securely. Add extra chlorine to the pool to help prevent contamination (3 gallons of chlorine per 5,000 gallons of water).

Fill your car’s gas tank.


Getting special assistance

Find out about any special assistance that may be available in your community. Create a network of neighbors, relatives, friends and co-workers to aid you in an emergency. Discuss with them your needs and make sure they know how to operate any necessary equipment.

If you live in an apartment building, ask the management to clearly mark accessible exits and to make arrangements to help you evacuate the building.

Keep a supply of extra wheelchair batteries, oxygen, catheters, medication, food for guide or hearing-ear dogs. Also, keep a list of the type and serial numbers of medical devices.


Is your home safe? Stay put

If  your house is structurally sound and in a non-evacuated zone, you should ride out the storm there.

Leaving your home when it isn’t necessary adds to traffic congestion and makes it tougher on those who must evacuate.

During the storm, it is safest to use a battery-powered radio or television to monitor developments. If you lose power, turn off major appliances reduce damage.

Stay inside and keep away from windows or glass doors. Stay on the leeward, or downwind, side of the house. If the wind direction changes, move to the new downwind side.

If the storm center passes over your area, there will be a short period of calm. The wind and rain may cease, but do not go outside. Remember, at the other side of the eye, the wind speed rapidly increases to hurricane force and will come from the opposite direction.

Wait for official word before you leave your home.


During the storm

Monitor your radio or TV for the latest weather advisories and other emergency information.

Do not use electrical appliances.

Stay inside and keep away from windows. Stay on the downwind side of the house. If the wind direction changes, move to the new downwind side. Find a safe area in your home — an interior, reinforced room, closet or bathroom on the lower floor.

If the storm center passes over your area, there will be a short period of calm. Do not go outside. At the other side of the eye, the wind speed rapidly increases to hurricane force and will come from the opposite direction.

Wait for official word before you leave your home.


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