Executive director for the Institute of Energy Studies (IES), Nana Amoasi IV, has predicted the increment of diesel and LPG in the country.
According to him, the IES has been monitoring the Standard and Poor’s platform over the last two weeks and found that the price of gas oil on the international market went up by 3.3%, moving from $913 per metric tonne to $943 per metric tonne.
Also, he revealed that the price of LPG moved up from $557 per metric tonne to $570 per metric tonne. Owing to this, he explained that the prices point to the fact that these key products on the international market have gone up – as induced by the rising crude oil prices.
“The last two weeks, we had the average price of crude oil going for about $84 and at the close of the window, it went up around $92 per barrel. So, these key changes are some of the things informing the decision.
“We also realized that on the local forex market, the cedi depreciated by close to 1%. So, anytime you are looking at the direction of fuel prices, you may be mindful and be concerned about how your cedi is doing against the green buck, as well as international prices of these key commodities.”Nana Amoasi IV
Commenting on the price stability of petrol, which was unchanged, Nana Amoasi IV indicated that Ghana is “lucky” that on the international market, the price of gasoline went down by 2%.
In effect, he noted that this 2% should have brought some relief to consumers, however, because the cedi depreciated against the green buck, that respite may not be experienced by consumers.
“So, the price of gasoline is expected to remain stable but then, the Oil Marketing Companies can choose to spread the rising prices across gasoline. So, we may also see price of gasoline go up just to compensate the cushioning of the rising of the gas oil price.”Nana Amoasi IV
Commenting on the impact of the projected increment on the downstream petroleum industry, Nana Amoasi IV stated that the current happening may have a negative impact on the working capital of importers.
He elaborated that when the working capital of importers is the same, and price on the international market rises, importers can only import less of the product against the previous times.
“… It also means that they can give some small parcels to the OMCs to also supply on the market. The next thing is that when the price of crude goes up when importers also inch up their prices to reflect international prices, the OMCs struggle to buy larger quantities because their working capital has to be shored up to accommodate the increases.”Nana Amoasi IV
Impact of increment on consumers
Furthermore, the IES executive director noted that when there’re struggles for OMCs to get liquid supply to their stations, there’s bound to be pockets of shortages as it has been experienced over the last year.
“Mostly, you find GOIL stations without fuel – in spite of the Gold for Oil programme, GOIL is still struggling to make sure that enough fuel is made available at their outlets.”Nana Amoasi IV
Elaborating on what such an occurrence can mean for GOIL, Nana Amoasi IV, revealed that although he cannot speak on its impact on the oil company, GOIL can either make profit or break even.
He explained that when the importers increase their prices for the OMCs, its either they transfer that cost to consumers, or absorb it.
“If they absorb, of course they will make losses, but if they transfer to us, then of course, it’s the consumers that suffers. The impact on consumers is quite dire as well. For a consumer, anytime prices of fuel go up, your disposable income after taking out your transportation and fuel cost, goes down…”Nana Amoasi IV