Consumers can expect fuel prices to drop to as low as GH¢3.5 per litre if international oil prices remain in the US$20-US$25/bbl range, and GH¢4 per litre if prices rise to the US$30 – US$35 range, a former Chief Executive Officer of the country’s petroleum downstream regulator has projected.
Alex Mould, who headed the National Petroleum Authority (NPA) between 2009 and 2013, says he foresees the pump prices falling to between GH¢3.5 and GH¢4 depending on international oil market dynamics and performance of the domestic currency against other currencies, particularly the United States dollar.
“Ghanaian consumers should expect to see the price at the pump drop,” he told the B&FT. “I estimate that we could see the pump price go as low as GH¢3.50 per litre if oil prices remain in the $20-25/bbl range and GH¢4.00 per litre if prices rise to US$30-US$35 range. However, all these are dependent on whether or not our cedi remains stable in the current forex range of GH¢5.5-5.8 per US dollar.”
Per the analysis, it means that the current average pump price of about GH¢4.30 per litre being paid by motorists, could drop further down to GH¢3.5 per litre if world prices remain within the US$20bbl range.
Mr. Mould’s prediction of lower fuel prices is backed by the International Energy Agency, which expects that demand will slump by 29 million barrels per day in April — to levels last seen in 1995 — as the COVID-19 lockdown hits demand extremely hard, thereby leading to lower prices for consumers.
It also warned that output cuts (such as last week’s OPEC deal to remove 19.5m bpd) will not be enough to offset this slump in demand.
For 2020 as a whole, the IEA predicts demand will slump by 9.3m barrels per day, as anxiety over the lockdown recession of 2020 is haunting markets, even though stocks have staged quite a recovery in recent weeks in some markets.
As of yesterday morning, oil was under pressure again after slumping by over 7 percent the night before to two-week lows, according to Bloomberg.
For instance, Brent crude dropped by another 1.5 percent in early trading yesterday to just US$29.18 per barrel, and US crude is heading back towards US$20 per barrel, which means they lost more than half their value this year alone.
Local fuel market
Prior to this month’s first pricing window, the Institute of Energy Security (IES) had projected, due to the significant fall of 33.36 percent in Brent crude price, coupled with the considerable drop in the prices of Gasoline (51.29 percent) and Gasoil (27.96 percent) on the international market, that prices of fuel on the local market will drop by 16 percent – 24percent, in line with the Price Deregulation regime.
The national average price of fuel per litre at the pump stood at Gh¢4.88 and Gh¢4.90 for Gasoline and Gasoil respectively before IES’s predictions, but now goes for an average of GH¢4.30.
Meanwhile, there are some who believe that the fall in local pump prices still does not reflect the fall in global oil prices.
The IES, for instance, last month called on government through the NPA, the sector’s regulator, to bring pressure to bear on Oil Marketing Companies (OMCs), to reduce prices of fuel at the pumps to reflect the trend on the international market and the relative stability of the cedi against the US dollar.
