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News : World Last Updated: Dec 12th, 2016 - 00:53:35

Unhedged again
By Marston Gordon
Dec 12, 2016, 00:44

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How on earth could Jamaica manage to get it wrong, again and again!

In June 2015 the then government instituted a program to hedge crude oil prices and followed with another contract in September 2015 both above USD65.00 strike price. By January 2016 West Texas Intermediary (WTI) traded at USD30.00 per barrel and in February of the same year the Jamaica Labour Party (JLP) replaced the People’s National Party (PNP) as government.

Finance Minister, Mr. Audley Shaw doubled the special consumption tax (SCT) from JA$7.00 to JA$14.00 per litre of gas and has not spent a dime to purchase any contract to hedge against adverse movement in the price of crude; the SCT was siphoned off to pay for his party’s election ticket.

The first hedged contract expired worthless and the second is due to expire this month, likewise worthless.
Within the last two weeks significant development has taken place within the oil exporting community. The organization of the petroleum exporting countries (OPEC) has agreed to production cut and now non-members have struck a deal to reduce crude output; WTI has moved from USD45.00 to 55.00 per barrel.

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