IES predicts 3-5% drop in fuel prices

The Institute for Energy Security (IES) has predicted fuel prices in Ghana are likely to drop “within the band of 3% and 5% at the pump.”

IES in a statement on Monday said its forecast is based on the fact that “average Brent crude price has fallen by 9.50%, Gasoline by 14.86% and Gasoil by 10.88%. We also note that the Cedi lost 1.32% of its previous value to the U.S Dollar within the window.”

“On this basis, the Institute for Energy Security (IES), all things being equal, foresees fuel prices on the local market falling within the band of 3% and 5% at the pump,” IES said.

Below is the full IES statement:

REVIEW OF JUNE FIRST PRICING-WINDOW

Local Fuel Market

The window under review saw prices of Gasoline and Gasoil remain largely unchanged due to a strong intervention by the National Petroleum Authority (NPA). As a result, average prices of Gasoline and Gasoil still stands at GH¢5.21 and GH¢5.18 respectively. Also in the window, the Ghana Standards Authority (GSA) uncovered ‘pump-cheating’ by some select Oil Marketing Companies (OMCs) in Accra. Some of the named OMCs have however disputed the GSA allegation with explanations. All things being equal, IES Market-scan shows Benab, Pacific, SO Energy and Lucky Oil sell the least-priced fuel on the market.

World Oil Market

On the world market, prices for coal, natural gas, LNG and crude oil have all dropped significantly in recent weeks. Analysts have attributed this development to the fear of global economic growth slowing. On Brent crude, oil leaders are due to meet in Vienna even as Saudi has assured that OPEC+ would not let the oil market slide any further. Within the window, accusations and counter-accusations among U.S-Saudi-Iran-about a tanker attack off the Gulf Oman, it appears a major conflict could be sparked in the region.

In actual crude pricing terms, average Brent crude price has fallen by 9.50%; dropping from $72.15 per barrel to $65.30 per barrel. Prices of finished products based on Standard and Poor’s Platts Benchmark have fallen heavily. Gasoline and Gasoil prices have reduced by 14.86% and 10.88% respectively.

Gasoline is trading at a reduced price of $638.30 per metric ton, up from its previous price of $749.68 per metric ton. Gasoil which was previously selling for $639.88 per metric ton is now trading at $570.25 per metric ton.

Local Forex

The Cedi’s gains over the US Dollar is beginning weaken. IES economic Desk computed figures show the cedi depreciated by 1.32%. The cedi which sold at GH¢5.29 two weeks ago at the last window is currently selling at GH¢5.36.

IES PROJECTION FOR JUNE SECOND PRICING-WINDOW

It is noteworthy that average Brent crude price has fallen by 9.50%, Gasoline by 14.86% and Gasoil by 10.88%. We also note that the Cedi lost 1.32% of its previous value to the U.S Dollar within the window. On this basis, the Institute for Energy Security (IES), all things being equal, foresees fuel prices on the local market falling within the band of 3% and 5% at the pump. While we advise Ghanaians to look out for competitive prices in their choice of a fuel retail outlet, we wish to call on the GSA and the NPA to intensify their monitoring of the fuel retail market to ensure Ghanaians get quality fuel at their money’s worth. It is our considered view that the present sanction regime for OMCs whose pumps/attendants cheat their customers is not deterrent enough. Advisedly, OMCs should up their own internal monitoring to safeguard the interest of customers who patronize their services.

Signed: MIKDAD MOHAMMED, Research Analyst