AMMAN — During its monthly meeting
last week, the
Ministry of Energy and Mineral Resources’ Petroleum Products
Pricing Committee decided that prices of crude oil and other petroleum
derivatives are to be raised for the month of August, citing the rise in oil
prices globally.
اضافة اعلان
A day after the committee’s
meeting, Brent Crude and
US West Texas Intermediate crude settled at $75.84 and
$75.23, respectively, after both metrics climbed by more than $2, reaching
their highest since October of 2018.
The recent spike in energy prices
forebodes of further economic difficulties for people in Jordan, which is
heavily reliant on imports for its energy needs, according to experts.
The increase in prices was immediately
reflected across local gas stations. Octane 90
gasoline is up 20 fils and now stands
at JD0.81 per liter, whereas octane 95 gasoline is up 30 fils to JD1.04. Diesel
and kerosene both increased by 25 fils, amounting to an identical price of
JD0.605 per liter.
When more money is put towards
energy used for the powering of homes and cars, Jordanians are left with less
disposable income, i.e., income to spend in other areas like food and
healthcare, and as price hikes simultaneously prevail among other commodities,
the burden is bound to intensify for Jordanians, energy-focused journalist
Lahab Atallah notes.
According to Reuters, hedge funds
and other money managers around the globe are “confident prices will rise
further” as coronavirus vaccine deployment intensifies, more businesses open,
and travel resumes. Investment bank Goldman Sachs even forecasts that prices
will hit $80 per barrel this summer.
In an interview with
Jordan News, Atallah
accredited the sustained rise in prices to three main factors: OPEC oil supply
reduction, the reopening of the economy, and geopolitics.
As of July, supply cuts put in
place by the
Organization of the Petroleum Exporting Countries and allies –
abbreviated OPEC+, stand at 5.8 million barrels per day (bpd). Crude oil price
is merely “a matter of supply and demand,” says Atallah. When supply cuts
occur, there is an excess in demand. Subsequently, prices go up. This year, oil
prices rallied 30 percent.
As part of reopening measures in
Jordan, As of July 1st curfew across the Kingdom now commences at
1am rather than at 11pm, while those who carry valid vaccine cards are no
longer subject to curfew restrictions, which means that businesses can now stay
open an extra two hours, and as tourism picks up due to the expansion of air
travel, demand for energy is further increasing.
Meanwhile, alternative sources of
energy such as oil shale are already costly to extract. Oil shale deposits are
present in over 70 percent of Jordanian territory, amounting to over 30 billion
tons. Extracting one barrel of oil shale will cost anywhere from $35 million to
$45 million, according to Jordanian energy expert Zuhair Sadeq.
Oil shale’s high cost, which comes
despite its abundance, is the result of “the unconventionality of its
extraction,” says Sadeq in an interview with
Jordan News, which consists of
extensive mining and heating.
Like oil shale, renewable energy
sources remain inaccessible to most Jordanians. When coupled with economic
downturn, rising energy cost is bound to be “faced with consumer resistance,”
says Reuters.
This costliness is particularly
concerning when considering that “energy is necessary for economic growth,
social development and improved quality of life,” as per a Heliyon Journal
report dissecting energy consumption in Jordan.
Energy price increases, therefore, inevitably
inhibit economic growth and social improvement, according to the report.
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