AKEED, Lana Kazkaz

As the fuel pricing committee makes new decisions every month, people talk in the media and on social media platforms about whether the new prices of oil derivatives reflect international oil prices, when they go up or down. They also talk about the profit made by the government by raising prices and the tax levied on these commodities.

In a meeting it held on Saturday, 31 March, the fuel pricing committee decided to raise the prices of 90-octane gasoline for April to 780 fils per liter, instead of 760 fils, and 95-octane gasoline to 1,005 fils per liter, instead of 985 fils. It also decided to raise the price of diesel to 570 fils per liter, instead of 560 fils. Meanwhile, the price of kerosene remained fixed at 520 fils per liter for another month.

Since the start of 2018, there have been five changes in fuel prices, four of which were scheduled for the beginning of each month. This is in continuation of the government policy over the past four years to modify fuel prices on a monthly basis. This is in addition to the increase in taxes, approved by the government in mid January, on a number of commodities, including fuel. Accordingly, prices increased by two piasters for 90 and 95 octane gasoline, while the price of diesel remained unchanged.

The committee raised the prices of 90 and 95 octane gasoline and diesel for January by one piaster per liter and reduced the price of kerosene by 30 fils per liter. In the beginning of February, the government raised the price of 95-octane gasoline by three piasters and 90-octane gasoline and diesel by one piaster. In March, the price of 95-octane gasoline dropped by two piasters, while 90-octane gasoline and diesel dropped by half a piaster. In the beginning of April, the price again rose by 25 fils (two piasters and a half) for 95-octane gasoline, 20 fils (two piasters) for 90-octane gasoline, and 10 fils (one piaster) for diesel.

Based on the above figures, the increase in the prices of oil derivatives since the beginning of 2018 and until April has totaled six piasters per liter of 90 and 95 octane gasoline, which is equivalent to an increase of one dinar and 20 piasters per gallon (20 liters). As for diesel, there has been an increase of three piasters per liter at an average of 60 piasters, while one liter of kerosene dropped by 3 piasters at an average of 60 piasters per gallon.

Internationally, from the beginning of January and until the middle of the same month, the price of one barrel of oil increased by around $2.18 from $66.57 per barrel to $68.61. In February, it dropped again to $65.62 per barrel and continued to drop until the middle of February. Despite the drop in oil prices internationally during that period, the oil derivatives pricing committee raised fuel prices for 90-octane gasoline and diesel by 15 fils per liter and 25 fils for 95-octane gasoline.

With the beginning of March, international oil prices witnessed a noticeable drop and reached $63.83 per barrel. This led to a decline in fuel prices in Jordan by half a piaster per liter for 90-octane gasoline and diesel and one piaster and a half for 95- octane gasoline. However, oil prices again rose with the beginning of April and reached $70.32 per barrel. In the wake of this rise, the government decided to raise the prices of 90 and 95 octane gasoline by two piasters per liter and diesel by one piaster per liter.

The government justified raising fuel prices by saying that it was due to the increase in oil prices internationally. According to international websites, prices have gradually increased between the middle of March and its end from $65 per barrel to around $70 per barrel. Meanwhile, the increase in the price of one barrel of oil internationally from the beginning of January until 1 April totaled $3.45 (2.44 dinars).

One media website published a statement by Nahar Seidat, president of the Gas Stations Owners Association, in which he deplored the recent increase, saying that it was unwarranted. Another website reported a statement by Haitham Zayadin, chairman of the parliamentary Energy Committee, in which he said that "the government raised prices much more than international prices."

One website cited an economic analyst as saying that "the government raised fuel prices because the oil derivatives pricing committee depends on the Platts benchmark for prices of refined oil derivatives, and not the price of the barrel of oil internationally."

A media website carried a statement by MP Raed Khalaileh, former chairman of the parliamentary Energy Committee, in which he said that "increasing prices in this manner is a government decision that lacks awareness since increasing prices by 2 piasters means increasing the income of the beneficiary by 3 million dinars monthly, or 36 million dinars annually."

In a previous statement, the oil derivatives pricing committee explained the method of determining monthly prices through the pricing mechanisms of oil derivatives based on international prices of oil derivatives, approved by the Cabinet on 5 February 2008.

AKEED had previously published a detailed report titled "Does the Government Make Profit From the Oil Bill? Missing Question of Investigative Journalism." The report discussed the contradiction between one media outlet and another over the change in fuel prices and the response of government entities that deepens the mystery. 

In a telephone call made by AKEED, Husam Ayish, an economic expert, said that "the Jordanian government adopts a specific formula for pricing. This formula has 18 items, including sales tax, special tax, commissions of gas stations, and cost of transportation, in addition to monitoring prices of oil derivatives within five states worldwide for one month. Then, the price is set and presented to the minister of industry and approved. However, the Jordanian government does not rely on the price of Brent crude in pricing oil derivatives; its price is taken as an indicator for public opinion only."

He said that demand on oil derivatives plays a role in fixing the price of kerosene, for example. The price of kerosene has remained unchanged despite the rise and drop in the prices of other oil derivatives. He added that the change in prices does not follow international prices all the time or even the price at which the government buys oil derivatives. The government's need for more revenues is taken into consideration. This is in addition to administrative intervention, which increases cost without this being related to oil prices per se. All of this distorts the formula that the government follows in pricing oil and which is shown only to reflect transparency. This requires a change to this formula. He said that information must be made available to all people to reduce speculation about the revenues of the state from oil derivatives.

Ayish says that the government could levy greater amounts on every liter of oil derivatives in the future if it agrees to create a fund for developing and regulating the sector of public transportation.

Article 1 of the Press Code of Honor emphasizes "the right of citizens to positive contribution to the affairs of their country. To achieve this, media outlets must monitor, investigate, explain and question government decisions, especially those that affect the lives of citizens."