Fuel prices to remain unchanged

The turmoil within the oil industry over rising oil prices, which are currently at a 10-year high of 35 dollars per barrel, is taking its toll in a lot of countries world-wide.

Although government officials in Ghana are resisting the pressure to increase the fuel prices locally, they admit that it will be economically sound to increase the prices to reflect the international market price. A report filed by JOY FM correspondent, Stan Dogbe, states that the Ghanaian government is currently subsidising the price of fuel to make it affordable to Ghanaians who are experiencing worsening economic situation attributed to external forces including the increasing oil prices. With falling prices in Cocoa and gold, Ghana’s major foreign exchange earners and the soaring oil prices, the logical response is an increase in oil prices, but the government seems unwilling to take that decision.

The fear is that rising petroleum prices would spill over to non - related sectors putting real income under pressure. This is likely to lead to worker agitation for higher wages, which the government cannot bear. There is also the political angle to the story where the effects of a fuel price increase would not be favourable on the political fortunes of the government. With oil prices at the their current high prices, there are concerns that soon the Tema Oil Refinery may not be able to raise enough letters of credit to import crude oil. Such a scenario could effectively lead to shortages, queues at fuel service stations, a crippled transportation sector and finally bring the already worsening economy to a virtual standstill.

The goal lies in a reduction of the world prices or an increase in the prices locally to about 12,000 cedis or an equivalent of $1.84 a gallon. It is therefore heart-warming to hear that OPEC has indicated that it will raise oil production by at least 500,000 barrels a day, although the world's largest oil producer, Saudi Arabia, believes a lot more can be done by calling for a much greater increase.