Jordan's gasoline pricing explained

The article discusses how fuel prices are determined and priced in Jordan, with a focus on the reasons behind the lack of decline in local prices despite drops in the global market. The report explains that the government relies on the average prices of global derivatives over a 30-day period, rather than directly using the price of a barrel of oil, which slows the transmission of global price decreases to local prices. The pricing formula depends on three main elements: the internationally averaged prices of derivatives, transportation and distribution costs, and taxes and added fees, with taxes constituting a large portion of the final price. Since 2019, the government has adopted a fixed lump sum tax instead of a percentage-based one, reducing the impact of falling global prices on consumers. In August, the government decided to keep fuel prices for gasoline, diesel, and kerosene fixed despite rising global costs, aiming to shield the economy from inflation. This was supported by subsidies amounting to up to $299 million until July 2026. Experts and parliament members are calling for addressing the gap between global prices and local costs, improving transparency, and implementing tax exemptions to achieve greater stability, noting that the market continues to heavily rely on petroleum derivatives.

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