Brent crude prices rise to $123
Russian-Ukraine war affecting crude prices
Energy analyst with the African Institute for Energy Policy and Security, Alhaji Fawan Issah Iddi has called on government to in the meantime intervene in retail fuel prices to deregulate gasoline prices.
He stated the move will allow Oil Marketing Companies (OMCs) to set fuel prices based on cost and profit calculations, with profit being regulated at a given percentage.
He made these suggestions in a post via Facebook on May 31, 2022.
“Since the market cannot control itself, it is time to reintroduce fuel control mechanisms. Ghana’s economy is currently grappling with skyrocketing inflation figures reported by CSOs, with no apparent end in sight and high energy costs serving as the primary driver of these trends thus, drastic measures and policies must be adopted strategically," he wrote.
“In doing so, the government should temporarily intervene in retail fuel prices to deregulate gasoline prices and allow Oil Marketing Companies (OMC) to set fuel prices based on cost and profit calculations with profit being regulated at a given percentage. This will help retailers manage the cost of oil prices,” the energy analyst added.
This comes after the rise in Brent crude price to $123 on Tuesday, May 31st, 2022.
According to him, this will cause an increase in gasoline prices by 5% to 8% per liter by Thursday, “with an interesting decline in gas oil prices of 3% to 4%”, according to data available to him."
However, data from the Ghanaian energy market suggests that gasoline prices will inherently increase by 5% to 8% per litre by Thursday, 2nd June 2022.
Read the full recommendation of Alhaji Fawan Issah Iddi below:
“Brent crude rose above $123 this morning, Tuesday, May 31st, 2022, owing to three factors: the Covid-19 pandemic effect, the Ukraine-Russia war, and an increase in demand as summer approaches in Europe. In comparison to natural gas (NGP) and heating oil prices (HOP), the COVID-19 pandemic has a greater impact on oil prices (OPs).
Furthermore, the results show that COVID-19 has a consistently negative impact on EPs across all quantiles. When a relationship shifts from short to long term, the magnitude of the impact increases. In the short term, the pandemic has had an impact on energy prices, necessitating prudent policies to fully comprehend the Covid-19 impact on energy prices.
In light of the Russia-Ukraine war, countries have been forced to impose sanctions on Russia; one of these being the deprivation of Russia selling its energy. Some countries including Hungary have however defied these sanctions due to their heavy reliance on Russian oil. Yet, the unfortunate result of these sanctions is high energy and fuel prices which is evident in the plight of households and businesses worldwide.
Relevant data from the Ghanaian energy market suggests that gasoline prices will inherently increase by 5% to 8% per litre by Thursday, 2nd June 2022; Gasoil prices will also experience a decline between 3% to 4%. The local price increment can be attributed to the cedi depreciation and the current Brent crude price hike. Moreso, the cedis, which had been performing quite well within the 7 GHS to the dollar range in recent months has now crossed to the 8 GHS range.
These statistics prove that the Ghanaian market does not possess the tenacity to control itself hence I believe it is time to reintroduce fuel control mechanisms. Ghana’s economy is currently grappling with skyrocketing inflation figures reported by CSOs, with no apparent end in sight and high energy costs serving as the primary driver of these trends thus, drastic measures and policies must be adopted strategically.
I suggest that the government should temporarily intervene in retail fuel prices by deregulating gasoline prices thus allowing Oil Marketing Companies (OMCs) to set fuel prices based on cost and profit calculations with profit being regulated by the government within a given percentage. This will effectively help retailers manage the cost of oil prices and relieve Ghanaians the plight of increased fuel prices at the pump.”
File photo a fuel pump