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Business News Thu, 27 Sep 2007

Fuel Prices To Go Up in October

... as crude oil price hits $80/barrel
Ghanaians should brace themselves for increases in services that affect their lives on day to day basis.

As the public utility and regulatory commission is deliberating on the proposals from Ghana Water Company and the Electricity Company of Ghana for 100% increase in tariffs come October 2007, hints from the National Petroleum Authority (NPA) indicates that fuel prices are also to go up in October this year.

This follows crude oil extending its slide towards $80 a barrel yesterday on continued profit-taking from last week's record high.

Speaking to the Business Chronicle, the Public Relations Officer of NPA, Mr. Steve Larbi said while prices are expected to go up because of the increasing prices of the commodity on the international market, he did not know the magnitude of price increases regarding premium petrol, gasoline, kerosene and liquefied petroleum gas would depend on the recent increase in the crude oil prices on the international market.

Last month saw prices of some major petroleum products in Ghana going down after some increases a fortnight ago.

The indicative maximum price of premium petrol went down by 4.32% or 4.11 pesewas to 91.20 pesewas per litter from 95.31 pesewas per litter quoted in August.

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That of kerosene also fell by 0.26% or 0.27 pesewas from 75.87 pesewas per litter in August to 75.60 pesewas per litter.

However, the indicative maximum price of Liquefied Petroleum Gas (LPG) shot up by 2.49% or 1.88 pesewas from 75.35 pesewas per GHp/Kg to 77.23 pesewas GHp/Kg whilst the price of a litter of gasoline remained unchanged.

The indicative price is a price beyond which an Oil Market Company in Ghana is not allowed to sell petroleum products.

On the international market, US crude for November fell 73c to $80,22 a barrel by midday, adding to yesterday's 67c loss to bring it about $4 below the record $83,90 set by the October contract last Thursday. London Brent crude shed 50c to $78,41 a barrel.

US crude oil production in the Gulf of Mexico rose to 80,7% of capacity yesterday, up from 37% on Friday, the US Minerals Management Service said, as oil companies redeployed workers to offshore rigs.

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"What we saw was a risk premium embedded into crude prices, but now that the storm passed without damaging production facilities, we see prices coming down," said Gerard Burg, minerals and energy economist at National Australia Bank.

But traders kept a wary eye on upcoming storm threats. The US National Hurricane Centre said yesterday a tropical cyclone could form in the southwestern Gulf of Mexico, while a couple of tropical depressions could form in the Atlantic.

However, three out of four weather models predict the system will steer clear of US oil and gas producing facilities.

"In the short term, we believe there's potential for a price correction," said Harry Tchilinguirian, senior oil analyst at BNP Paribas, citing heavy refinery maintenance expected next month and a seasonal drop in demand as bearish factors.

"When the risks of hurricanes are also behind us, the sort of correction we had last October - losing $10 quite easily at the end of the season - we believe we could have a repeat of that," he said.

Source: Chronicle