B&F: Will the fall in crude oil prices reflect at pumps?

Crude oil prices on the international market have plummeted by around 30 percent, raising fears that projected oil revenue generation for the state be severely compromised. Following the recent drop of crude oil prices on the international market, the Institute for Energy Security (IES) is warning that Ghana risks losing out on its projected oil revenue generation following the global drop.

Oil prices plummeted on Monday after Saudi Arabia slashed its official selling prices – giving rise to concerns that the result will impact negatively for Ghanaians at large. This is because of the fall in projected oil revenue, and also it could affect stability of the local currency which has remained relatively stable.

What remains baffling with the country’s deregulation of petroleum is that when prices drop on the international market, they never fall in commensurate manner at the pumps in Ghana. Consequently, the Consumer Protection Agency (CPA) is calling for an immediate drop in the fuel price at the pumps, and says it is expecting anything less than a 10 percent drop in the price of petroleum.

“If the international oil price should stay around the US$30 per barrel mark end-year, Ghana’s government is less than likely to get even half of its projected revenue for 2020”, Paa Kwasi Anamua Sakyi, Executive Director of the Institute of Energy Security – an energy think-tank, told this paper.

The situation, he noted, could be further compounded by low oil production, as evident in Tullow’s revised production targets.

As a result, Mr. Anamua Sakyi explains that the country is losing out on low prices induced by both the Coronavirus and OPEC + decisions from two ends – a loss in projected revenue, and loss of possibility of much lower fuel prices.

It is therefore quite surprising that the oil marketing companies adjust prices upward immediately there is a little shift of the factors which determine prices on the world market, but are reluctant to reduce prices when those factors drop.