A sustained surge in global crude oil prices, driven by regional disruption in the Middle East’s Strait of Hormuz, has triggered a cumulative $21 to $22.50 increase in fuel prices at Jamaica’s state-owned sole refinery Petrojam over just five weeks, pushing industry leaders and top business figures to pressure the Jamaican government for an immediate cut to the special consumption tax (SCT) on petroleum products.
Data from Petrojam’s April 1 pricing breakdown shows that for a gallon of 87 octane gasoline priced at $172.3828, SCT charges account for more than 31 percent of the final pump price, with $37.7761 in base SCT and an additional $15.6712 in ad valorem SCT applied to the ex-refinery base price of $118.9355. This disproportionate tax burden has drawn sharp criticism from Christopher Berry, Executive Chairman of leading investment firm Mayberry Group, who argues that skyrocketing energy costs are squeezing household budgets and eroding competitiveness across every sector of the Jamaican economy.
Berry made the call during an April 2 virtual investor briefing hosted by Mayberry Investments, noting that the heavy SCT levy ripples through daily life for Jamaican consumers, appearing in higher electricity bills as well as direct fuel costs, with low- and middle-income families unable to absorb the extra expenses. His appeal comes as Jamaica navigates its second major external economic shock in just six months: after Hurricane Melissa caused extensive damage to western Jamaica and disrupted the key winter tourism season, the Middle East supply disruption has sent shockwaves through global commodity markets.
Beyond transportation fuel, the spike in oil derivatives has driven up costs for critical agricultural inputs, most notably fertilizer, where a third of global seaborne fertilizer trade has been cut off by the crisis. For the manufacturing sector, higher fuel prices deliver a dual blow: rising liquified natural gas (LNG) and electricity costs push up production expenses, while higher diesel prices increase the cost of transporting finished goods to market. Richard Pandohie, CEO of Seprod Limited, one of Jamaica’s largest manufacturing and distribution conglomerates, warned in a recent Television Jamaica interview that while overall food availability will remain stable, widespread affordability will become a major challenge as price hikes filter through to grocery shelves.
As of the most recent Monday trading session, global crude benchmarks have seen dramatic double-digit gains: Brent crude has risen 82 percent to $113.19, while West Texas Intermediate (WTI) has climbed 99 percent to $115.52. The unusual inversion of WTI trading above Brent, a reversal of the typical market dynamic where Brent carries a premium due to water transportation costs, signals that markets are pricing in persistent supply delivery risks. Other emerging economies across the Indo-Pacific have already moved to address the energy crisis: India and Vietnam have cut fuel taxes and excise duties on petrol and diesel to cushion consumer impact, while Bangladesh, Nepal, and Sri Lanka have implemented emergency measures including reduced business operating hours and national holidays to conserve energy.
Jamaica has a recent precedent for targeted intervention during energy price shocks: in 2022, then Finance Minister Dr. Nigel Clarke rolled out a $2 billion targeted support package for vulnerable households, alongside a 20 percent electricity subsidy for Jamaica Public Service (JPS) customers using up to 200 kilowatt-hours per month between April and July. Berry argues that in the current crisis, cutting SCT is a necessary step to prevent broad economic damage, even with the near-term impact on government revenue. “Although the higher SCT on increased fuel prices offsets some of the government’s negative cash flows, the damage to the overall economy far outweighs that revenue gain,” Berry said, urging policymakers to immediately reduce fuel taxes to avoid long-term harm.
Under Petrojam’s current pricing framework, the refinery adjusts product prices every Wednesday to align with changes in the US Gulf Coast reference price, which has risen 67 percent between February 27 and March 27 to hit $3.043 per gallon. A built-in cap limits weekly price movements to a maximum $4.50 increase or decrease, meaning the refinery must absorb excess costs when global prices spike sharply. Up to the week of March 27, Minister of Information and Technology Daryl Vaz confirmed that Petrojam has already absorbed $795 million (US$5 million) in unabsorbed price increases, and warned that the government may need to draw on the consolidated fund or net international reserves (NIR) to cover these costs. The refinery already posted a US$28.66 million net loss in the 2025 fiscal year ending March, and is projected to record a US$9.63 million net loss for the 2027 fiscal year.
Vaz told Nationwide News Network that he has already briefed Finance Minister Fayval Williams on the situation, and that the government’s top priority is minimizing disruption to the broader economy. On the supply side, Vaz emphasized that while Petrojam sources most crude from Brazil, Ecuador, and Colombia, and purchases finished products on the open market primarily from the United States, the refinery holds four weeks of stock on hand and has secured written commitments from all suppliers guaranteeing no disruptions to deliveries, eliminating near-term supply shortage risks.
Despite the clear benefits for consumers, a cut to SCT carries significant fiscal risks for the Jamaican government. Fuel SCT collected through Petrojam is a major revenue stream for the government, generating $45.3 billion in annual revenue. For the 2025 fiscal year, Petrojam collected US$225.82 million in SCT, with projections of US$247.49 million for 2026 and US$284.63 million for 2027, based on an average crude acquisition price of US$80.19 per barrel. The government is already projecting a $134.6 billion deficit for the 2026 fiscal year and a $190.7 billion deficit for the current fiscal year, with Williams’ 2027 budget including $18.04 billion in new taxes for the upcoming fiscal year and an additional $15.6 billion for the following year, a reflection of lingering fiscal damage from Hurricane Melissa.
For ordinary Jamaicans, the pressure is already mounting: JPS customers have already seen higher fuel surcharges added to their monthly electricity bills, while businesses are preparing to implement a higher minimum wage starting June 1. Combined with broader economic slowdown pressures, the latest fuel price hikes are set to push household and business costs even higher in the coming months, leaving the Jamaican government caught between the urgent need to relieve consumer strain and the risk of exacerbating already wide fiscal deficits.