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07.05.2008 Business & Finance

NPA not ready to review policies…as oil sets new record near $121 a barrel

By Stephen Odoi-Larbi - Ghanaian Chronicle

Global oil prices on Tuesday reached an all-time high record near US$121 per barrel. Many motorists and other consumers in the country have called for reduction in the tax segment of the petroleum and diesel taxes in order to help alleviate their suffering.

Professor Ivan Addae Mensah, Chairman of The National Petroleum Authority (NPA), the regulators of oil prices in the country, said that much as the trend in oil prices on the world market is disturbing, very little could be done to review its policies.

Speaking on a Joy FM programme, a local based fm station in Accra, the NPA chairman believed that it was time for the government to review the deregulatory policy, but was quick to add that until government comes out to change the petroleum deregulation policy, little could be done about it by the authority.

“Our position still remains the same until government itself come out to say I want to change the policy. Previously, the taxes were percentages of the ex-refinery price but now we have the taxes fixed. With the way the price of crude oil has gone up, the taxes has become relatively insignificant”, he said.

According to him, calls on government to reduce taxes that have been imposed on petroleum products may not make much difference and therefore called for a debate on what options would best serve the Ghanaian economy. He therefore implored on motorists to look at their own lifestyles and the way they use fuel.

Dr. Kwabena Donkor, an expert in the petroleum industry pleaded with the government to control the prices of diesel temporally if not permanent, because of its strategic roles in the economy.

According to him, it would be unfair on the part of government to pass on every market rise on diesel to industry, transport and to the public. “Government can send a signal that diesel is our major economy driver and therefore we wouldn't want diesel to go up”, he added.

With increasing price in crude oil on the world market, the faith of the country now remains in limbo.

Fueled by supply disruption in Nigeria, where strike and attacks by militants is marring production and weakening of the US dollar, there is a clear indication that oil prices would continue to soar.

Tension in the Middle East is also a contributing factor to this latest twist on the market. Tension between the US and Iran (the fourth biggest oil producer), increased when Iran refused to accept inspections of its nuclear programme.

US light crude for June delivery inched up to a record US$120.93 a barrel with London Brent crude recording an increase of 33 cents at US$118.32 a barrel, after an earlier record of US$119.07.

Just last week, OPEC, the oil producing cartel, warned that the price of crude oil could keep rising to reach $200 a barrel if disruptions in Nigerian and tension in the Middle East remained the same.

British Petroleum's (BP) shut down its North Sea pipeline over the weekend and has also been a major contributing factor to the increase of oil prices on the world market. This happened after staff of the company walked out of the Grangemouth refinery in Scotland in a two-day strike over pensions.

The current state of the oil prices on the world market has resulted in Indonesia considering leaving the oil cartel (OPEC) to concentrate on domestic production.The ageing oil wells of the country have resulted in its production declining, making it a net importer of oil when crude prices are at record levels.

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