Oil at $100.. Jordan balances treasury costs and consumer protection

Diyah: Continued rise puts pressure on the budget and purchasing power

The wave of rising oil prices does not stop at gas stations, as the increased cost of diesel finds its way into transport wages and production costs, and from there to the prices of goods that families buy. With winter approaching and global energy supply disruptions continuing, the question arises about the treasury's ability to continue absorbing the increases before their impact is passed on to the consumer.

At a time when oil prices are hovering around $100 a barrel, Jordan has chosen to stagger between fixing fuel prices and raising them partially, bearing price differences that, according to experts' estimates, amounted to about a quarter of a billion dinars. Energy and economic experts believe that this policy has mitigated the transmission of the shock to citizens and productive sectors, but it places public finances under greater pressure the longer the rise in global prices lasts.

Economic expert Hashem Aqel said that the rise in energy prices is a global wave, in light of supply disruptions, rising transport and insurance costs, and geopolitical risks. He explained that oil exceeding $100 a barrel does not mean that gasoline and diesel prices rise by the same percentage in all countries, as the final price is determined according to refining costs, transport, taxes, fees, marketing margins, and each government's policy.

He indicated that Jordan chose to stagger pricing through partial increases and fixing, rather than reflecting global increases fully and immediately, which provided a degree of protection for the citizen and economic sectors, especially since diesel is used in transport, industry, agriculture, and services, and any significant increase in it could be passed on to the prices of goods and services.

He pointed out that absorbing price differences adds burdens to public finances, while the tax on diesel and kerosene has become zero, with the government bearing the price differences. He estimated the cost of the differences borne by the treasury as a result of the policy of fixing and limited increases at about a quarter of a billion dinars.

He explained that staggering allows for distributing the impact of the rise over subsequent months when conditions permit, instead of burdening the consumer with the full shock at once, in addition to accompanying measures, including fixing the fuel price differential item in the electricity bill at zero during many periods, and providing targeted support to the industrial sector.

He emphasized that comparison with other countries does not hold up by looking at the price of a liter of gasoline or diesel alone, but requires looking at the volume of taxes, what governments bear, and the percentage of the increase that actually reaches the consumer.

He believed that continuing to fix prices for a long period puts pressure on public finances, while passing on the full increases leads to pressure on the citizen and economic activity, which makes staggering the increase, while protecting the most affected segments and sectors, a necessary path for managing the phase.

For his part, Hussein Al-Sarairah, Director of Programs at the Policy and Society Institute, said that Jordan chose to absorb part of the global shock and distribute its impact over time, rather than passing it on to the consumer all at once.

He pointed out that the price differences borne by the treasury reached, according to the official figures he cited, about 224 million dinars until the end of August, with the prices of major derivatives fixed for the third month despite the rise in global price averages.

He explained that Brent crude reaching around $100 a barrel represents a global and regional shock whose effects extend to the prices of derivatives, shipping and insurance costs, and supply chains, calling for evaluating the impact of the crisis on the consumer and what governments bear, not just the price of a barrel alone.

He said that the Jordanian pricing policy was based on limited increases when necessary and fixing when the increase is greater than the market and consumer's ability to absorb it, pointing to fixing the price of a liter of Octane 90 gasoline at one dinar, diesel at 850 fils, and kerosene at 550 fils, despite the rise in global averages.

He considered that the treasury bearing part of the energy cost limits the transmission of the increase to transport, shipping, industry, agriculture, and services, and then to the prices of goods and the cost of living, but he warned against turning fixing into a permanent policy if global prices remain high, due to the resulting accumulation of differences and pressures on public finances.

Al-Sarairah believed that diversifying the energy mix, expanding renewable energy, improving storage and import infrastructure, and proactive measures to secure derivatives provide Jordan with a better ability to deal with the crisis, calling for continuing to absorb sharp increases, directing support to the most impactful areas, and accelerating investment in energy efficiency and local and renewable energy sources.

In turn, economic expert Munir Diyah said that the continuation of conflicts in the Middle East has affected energy prices and supplies, with refineries and oil and gas transport pipelines damaged, maritime corridors affected, shipping and insurance costs rising, and supply chains disrupted.

He pointed out that the oil bill rose by more than 52% during the first half of the current year, which increases the demand for foreign currencies and widens the trade deficit, in addition to the pressure on the government's ability to bear price differences. He indicated that the 2026 budget was built on a price of approximately $65 per barrel of oil, while prices are currently hovering around $100, which imposes additional costs on the treasury.

He explained that the rise in fuel prices increases the costs of transport, industry, agriculture, trade, and services, and is reflected in the prices of goods, the competitiveness of exports, and the purchasing power of families, warning especially of the rise in global diesel prices with the approach of winter, given its use in transport, industry, heating, and agricultural and productive activities.

Diyah said that the price differences borne by the government have reached nearly 250 million dinars since the beginning of the crisis, calling for a review of the fixed tax on fuel in a way that takes into account global prices and the citizens' ability to bear them, while at the same time limiting the accumulation of burdens on the treasury.

The opinions of the three experts intersect in that the impact of the oil shock is not measured by the price of a barrel alone, but by what is passed on from it to the cost of living and production, and what public finances bear in return. Between Al-Sarairah's estimate of 224 million dinars until the end of August, and the estimates of Aqel and Diyah, which approach a quarter of a billion dinars, the cost of staggering emerges as a key factor in pricing decisions over the coming months.