AMMAN — After
OPEC's decision to reduce oil production in May, economists expect a sharp increase in prices of all
commodities in the Kingdom. especially those that depend on petroleum products,
saying it is important for the Jordan government to take steps to apply
"green" economic solutions.
اضافة اعلان
The decision has come as a surprise, as it
will reduce output by 1.66 million barrels per day. With this reduction, oil
prices are expected to increase by 10 percent, bring the price per barrel up by
$10, Ammannet reported.
Economists say if this occurs,
"mad" price increases would be registered across all economic sectors and industries which depend on oil, as the gas price difference is an important
source of funds for the state Treasury.
Official data indicates that
government revenues from taxes imposed on oil derivatives are about $2 billion annually.
‘All Jordanians will be affected’Energy expert Hashem Aqel said the rise in
global oil prices will naturally affect the prices of oil derivatives locally,
as the Kingdom relies on importing all kinds of oil derivatives. Thus, “all
Jordanians will be affected by an increase in the prices of these derivatives,
and not only in terms of gasoline consumption”.
Diesel represents 55 percent of the total fuel consumption in the Kingdom, and a price hike will particularly affect industry, transportation, hospitals, hotels, and other sectors
Aqel added that
diesel represents 55 percent of the total fuel consumption in the Kingdom, and a price hike will
particularly affect industry, transportation, hospitals, hotels, and other
sectors, reflecting, in turn, on ordinary citizens.
Dr Muhammad Al-Farajat confirmed this view,
adding that he “fears the worst”, in that the price hikes will trigger
undesirable political and social developments in Jordan, because it is the
ordinary people who "will pay the price in the end".
Discontent among citizensRumblings in the streets of Jordan have already begun, as reported in recent months, and a further price increase in
May “will make people more depressed and add to their financial burdens”, as
they are already complaining that rising fuel bills — which can already take up
half of their monthly incomes and effect their basic needs — will worsen their
situation.
To relieve this mounting pressure, the government
announced by Royal decree in February the
freezing of the tax on kerosene for
the winter season. It was the Lower House deputies who pushed against a hike in
prices, given the fact that the government obtained large quantities of Iraqi
oil at reduced prices, and the import rate reached 10 thousand barrels per day.
The government has also imposed a
fixed flat tax on oil derivatives since 2019, at about half a dollar per liter,
regardless of the rise or fall in global fuel prices.
International reports show that Jordan is
one of the 10 countries with the highest fuel prices in the world, coming first
in the Arab world.
SolutionsThere are several proposed solutions to
confront the global prices hike, including a review of the flat tax imposed by the
government on oil derivatives.
Farajat recommends the adoption of
green economy solutions and educating society about environmental sustainability. He
also suggests allocating the oil exploration, drilling, and production
concession to experienced international companies to enhance sustainability and
improve production quality.
International reports show that Jordan is one of the 10 countries with the highest fuel prices in the world, coming first in the Arab world.
Aqel recommends activating price ceilings,
a decision that allows companies to compete in determining the prices of oil
derivatives. He also suggests using electric cars instead of those that run on
oil derivatives, to reduce transportation costs.
Regional oil production cutsSaudi Arabia announced last Sunday that it would implement a “voluntary cut” of approximately 5 percent of its production,
reducing its output by 500,000 barrels per day, in coordination with some other
OPEC and non-OPEC countries.
Iraq also said it would reduce production
by 211,000 barrels per day, the UAE by 144,000 barrels per day, Kuwait by
128,000 barrels, Kazakhstan by 78,000 barrels, Algeria by 48,000 barrels per
day, and Oman by 40,000 barrels per day. This brings their total reduction to
1.149 million barrels. Russia has also stated it would extend its previous cut
of 500,000 barrels per day through the end of the year.
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