Cedi’s depreciation dashes hopes of lower fuel prices

lower fuel pump prices

Consumers’ hopes of lower fuel pump prices following a fall in international prices will be wiped out by the cedi’s persistent depreciation, energy think-tank Institute for Energy Security (IES), has projected.

Petrol and diesel fell 10.96 percent and 0.54 percent respectively on the international market, and should lead to reductions of local pump prices during the second pricing window in September 2022.

However, the domestic currency depreciated by a significant 3.58 percent from the previous rate of GH¢9.75 to the current rate of GH¢10.10 to the US dollar – dashing any hopes of lower pump prices, with the exception of petrol.

“IES projects a marginal reduction in the current price of petrol at local pumps due to the significant decline in value of the local currency against the US dollar,” it said in its projections for this month’s second pricing window.

Meanwhile, even though the prices of diesel and LPG also dipped on the international market, IES said the cedi’s 3.58 percent depreciation may thwart any expected fall in price of the two products at local pumps.

It said consumers may rather be forced to buy diesel and LPG at a higher value over the current prices for the rest of September 2022, on account of the cedi’s fall against the American greenback.

The International Energy Agency said this week oil demand growth willgrind to a halt in the fourth quarter; but this, according to many domestic analysts, will make little impact on Ghanaians if the domestic currency continues its falling streak.

Crude oil has dropped substantially after a surge close to its all-time highs in March when Russia’s invasion of Ukraine added to supply concerns, pressured by the prospects of recession and weaker demand.

All these projections, however, have had little impact on domestic fuel consumers due to an ever-depreciating cedi; which has so far lost over 30 percent of its value this year.

Local fuel market performance

In the just-ended pricing window, fuel sold at all Oil Marketing Companies (OMCs) monitored by the IES went up by roughly 3 percent for petrol and 7 percent for diesel on average terms.

The national average price per litre of petrol stands at GH¢11.30 – up from GH¢10.95 in the last window and representing a 3.19 percent increase. Diesel national average price per litre stands at GH¢14.45 from a previous average of GH¢13.42, representing a 7.6 percent increase.

This is despite the fact the International Brent Benchmark saw a 2.77 percent price reduction over the previous pricing window’s average price of US$96.72 per barrel – to the current average price of US$94.04 per barrel.

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