Oil & Gas

Fuel Subsidy: Prices of aviation fuel, cooking gas crash

The prices of aviation fuel, known as Jet A1, and cooking gas, have reportedly been on downward slide as soon as the fuel subsidy was removed which jacked up the price of premium motor spirit (PMS) otherwise known as Petroleum.

 

From over N800, aviation fuel crashed to N650 in Lagos and N680 in Abuja from June 1, while slightly higher in Kano and Maiduguri and Port Harcourt.

 

Daily Trust checks indicated that Jet A1 was sold at N620 in Lagos; N660 in Abuja and N680 in Kano.

 

“The price is crashing and I think we can’t explain the trend, but I want to believe it is the forces of demand and supply that are at play.

 

“This has been the development since last week when fuel subsidy was removed from Jet A1. It appears this is a spontaneous reaction to developments in the oil and gas market,” said an operator.

 

Daily Trust reports that the price of Jet A1 skyrocketed has gone beyond what the operators expected, hitting almost N1,000 per litre last year.

 

One of the operators explained that the reduction in price of Jet A1 is a respite to airlines.

 

This is the situation with cooking gas with 12.5 kg crashing from about N14,000 to N6,950 in Lagos and about N8,000 in other states as at yesterday.

 

Checks at different locations yesterday indicated that the cooking gas sells at about N700 to N800 per kg as against over N1,000 a few weeks ago.

 

Energy Expert, Olusesan Okunade in a chat said there was no correlation with the crash in prices of cooking gas and jet fuel, adding it is just the forces of demand and supply.

 

He said, “I think it is just the forces of demand and supply that are working on the gas which we talked about in terms of liberalisation. I am sure because there is no fund in circulation, people are not buying so much. So there is supply, rather than wasting the resources, you will rather dispose at a very minimal margin. There is no gimmick for what is happening. I learned as of today (yesterday), it is about N6,950. It has no correlation with fuel subsidy.

 

“To the best of my knowledge, I have not heard anything being responsible for this. People just want to dispose of those things, and sell at a minimal margin as against when we were buying it N12,000; N13,000.

 

“For Jet A1, the demand is on the high side, people are still traveling. It is a specialized fuel for airlines. I have not heard anything special that they have done but I don’t think it is in correlation with removal of fuel subsidy.”

 

Also speaking, an economic analyst, Mr. Babatunde Adeniji said the supply may be more than demand with Jet A1 as well.

 

He added, “Sometimes the situation when these products are ordered is different from when they arrive. So many may receive the stock at the same time.”

 

(Daily Trust)

 

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