NDC making the same NPP mistakes on prices of Petroleum Products

Thu, 6 Jan 2011 Source: Gyamerah, Michael

Dear Sir:

In the Summer of 2009 I wrote an article on Ghanaweb titled On Prices of Petroleum

Products and NPP hypocrisy that exposed the

unprincipled and outright dishonest position of the NPP opposition on the 30% petrol

price increase in June, 2009. My article clearly

justified the increase using data from the US Energy Information Administration


I am therefore, shocked that the NPA has decided to increase prices of petroleum

products again even though my calculations below which are not

different from what I did in the Summer of 2009 show that the NPA’s decision is not

justified and is outright wrong.

First and foremost, the lie that the government subsidizes the prices of petroleum

products (gasoline/petrol, diesel/gas oil and kerosene) must stop.

This was one big lie for which I attacked the NPP when they were in power and the

NDC are repeating the same big lie. I am ready to expose the NDC

if they don't stop this nonsense which I heard the Deputy Minister of Energy spewing

out on Joyfm yesterday.

There is a GNA report on Ghanaweb yesterday that "A liter of diesel is selling at

GHc1.534p whilst super is also selling at GHc1.520p per liter. A gallon

of diesel sells at GHc6.91p and super also goes for GHc5.64 per gallon at the Market

Circle Total filling station".

1. Even though the Imperial gallon is 4.54 liters, the petrol/gasoline stations in

Ghana have adjusted their pumps to deliver 4.5 liters to the Imperial gallon.

This means that for 4.5 liters of super petrol sold in Ghana the price that should

be paid by the customer will be GHc 6.84 (GHc 1.52 *4.5) and not GHc 5.64

as reported by the GNA above. The price of an Imperialgallon of diesel reported by

the GNA is however, for all practical purposes correct at GHc 6.91

(GHc 1.534*4.5 = GHc 6.903).

2. From the US Energy Information Administration website, the highest retail price

(including taxes) of premium gasoline/petrol (equivalent to super petrol

in Ghana) as of January 3, 2011 was US$3.54/US gallon. This quoted price was in San

Francisco and US $ 3.16/US gallon in Houston where I live, with

Denver registering the lowest at US$ 3.04/US gallon.

3. The US gallon is 3.78 liters, so using the San Francisco price (for maximum

effect), a liter should sell at US$ 0.93651. At US$ 1.00 = GHc 1.44 this

should give the equivalent of GHc 1.35/ liter or GHc 6.07/Imperial gallon.

4. How can US companies be making huge profits by selling gasoline/petrol at prices

lower than in Ghana (6.07/6.84 * 100= 89% of Ghanaian price) and

the Deputy minister claim petrol is subsidized in Ghana?

5. This trick of using European petrol/gasoline prices to fool Ghanaians won't cut

it with some of us. For example, on October 18, 2010 when premium

gasoline/petrol price including taxes averaged US$ 3.07/US gallon in the USA, the

prices on a US gallon basis for Belgium was US$ 7.44, US$ 7.17 for

France, US$ 7.30 for Germany, US$ 7.20 for Italy, US$ 7.89 for Netherlands and US$

7.10 for the UK.

6. It is important to note that petrol/gasoline prices are very high in Europe

simply because of taxes as the spot prices (in US$/US gallon) of conventional

regular gasoline/petrol on September 3, 2010 show:

(i) New York Harbor, US$ 1.9378;

(ii) U.S. Gulf Coast (includes my home state Texas), US$ 1.9253;

(iii) Los Angeles, US$1.9478);(iv) Rotterdam (Netherlands), US$ 1.9787, and

(v) Singapore, US$1.9571

7. Although regular gasoline/petrol spot prices were quoted in (6) above, it should

be noted in the US, the maximum difference between regular add

Premium is US$0.20. In fact most cars and SUVs run on regular; the exceptions being

Acura, VW Tuareg etc which run on premium. Also note that

Rotterdam (Netherlands) with the highest spot price of US$ 1.9787/US Gallon if

US$0.20 is added to adjust to the premium gasoline/petrol price, this

works out to US$ 2.1787/US Gallon spot price. However, the retail price shoots from

nearly US$2.12 to US$ 7.89 after taxes etc as shown above!!!!!

8. Again from the US Energy Information Administration website, from 2000 to 2009,

the average retail price of regular gasoline/petrol in the US was

US$ 2.09/US gallon. The price may be broken down as follows:

i. Crude oil price = 51% (US$ 1.07/US gallon)

ii. Federal and State taxes = 22% (US$ 0.46/US gallon)

iii. Refining costs and profits = 15% (US$ 0.31/US gallon)

iv. Distribution and marketing costs and profits = 12% ((US$ 0.25/US gallon)

The average retail price per US gallon in 2009 was US$ 2.34 with the following


i. Crude oil price = 61% (US$ 1.43/US gallon)

ii. Federal and State taxes = 18% (US$ 0.42/US gallon)

iii. Refining costs and profits = 11% (US$ 0.26/US gallon)

iv. Distribution and marketing costs and profits = 10% (US$ 0.23/US gallon)

By November 2010 the average retail price per US gallon had gone up to US$ 2.86. The

breakdown is as follows:

i. Crude oil price = 71% (US$ 2.03/US gallon)

ii. Federal and State taxes = 14% (US$ 0.40/US gallon)

iii. Refining costs and profits = 5% (US$ 0.14/US gallon)

iv. Distribution and marketing costs and profits = 10% (US$ 0.29/US gallon)

9. Now according to the NPA’s Price build-up for premium petrol sold in Ghana

released on April 1, 2009

i. Ex-refinery/import parity = 64.03%

ii. Taxes and levies = 12.75%

iii. Marketers’ margin = 23.22%

The question for the NPA is rather simple. Of the 64.03% for the Ex-refinery, what

fraction goes to take care of the price of crude oil as shown

for the US in (8) above?

10. President Mills should intervene and stop this big lie and con game since I

sincerely believe he is an honest person unlike the type of leadership

Ghanaians had to endure from January 2001 – January 2009. This is free advice from

a person who thinks he has done a lot for Osagyefo Kwame

Nkrumah so far, and doesn't want to be forced to turn against him.

Michael Gyamerah, Ph.D., Houston.

Columnist: Gyamerah, Michael