Jet fuel, also known as jet fuel or aviation kerosene, is a type of highly refined petroleum-derived fuel specifically designed to power aircraft engines. There are several types of jet fuel, with Jet A-1 being the most commonly used worldwide, including in Colombia. This fuel is essential for the operation of commercial, military and private aviation, since its chemical composition allows efficient combustion at high altitudes and low temperatures, typical characteristics of the environment in which aircraft operate.
In Colombia, air transportation is crucial, particularly in a territory with a diverse topography and limited land infrastructure in some regions. Air routes not only facilitate the movement of people between major cities and more remote regions, but are also essential for the transportation of goods, both domestically and internationally. In addition, aviation is a key sector for tourism, which represents a significant source of income and employment in the country.
Currently, the country is experiencing a significant shortage of this fuel, due, in part, to production problems, especially at the Cartagena Refinery (Reficar) and delays in importing the necessary fuel. This has had a significant impact on the country’s airline industry. Airlines have had to cancel or reschedule flights due to the lack of fuel, which has affected important airports such as Pereira, Cúcuta, Leticia and Santa Marta. This situation has led to the implementation of emergency measures, such as additional fueling at international airports and technical stops in other countries for refueling.
In view of this crisis, the government, together with Ecopetrol, which is obliged to supply 95% of the supply of this fuel, took some actions, including the importation of 100,000 barrels of this fuel to guarantee this percentage. The president of Ecopetrol, Ricardo Roa, mentioned that this amount is equivalent to a figure close to 10% of the demand that will be met in the next few days.
In this sense, experts make a simple calculation to estimate the possible effect of fuel imports on the increase of air tickets. If the above is correct and we take into account that a barrel of jet fuel has a current cost of 88.8 dollars, the increase in the price of the missing fuel will be in the order of 11.3%. As mentioned, the average demand served will be 10%, which would result in an overall additional fuel cost in the country of around 1%. This increase is marginal, which partly explains why the authorities do not expect a significant impact on end-user prices.
However, it is important to make a call about the sufficiency in the supply of this fuel. If demand continues to grow sharply and local production fails to supply it, the imported component will be increasingly large. In such a scenario, the effect on air transport and cargo prices would be inevitable. For the time being, the situation seems to have been overcome.
Source:
- Comentario Económico ANIF, 28th August 2024
