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18.01.2011 Business & Finance

Another fuel price increase looms

By Ghanaian Chronicle
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By: Daniel Nonor
Ghanaians must be girding themselves to pay a little more at the pumps, as the price of oil on the world market has assumed the rocket heads again, rising steadily from the region of $80 per barrel in the latter part of last year, to a present figure of $95.43, and steadily moving towards the $100 mark.

This trend seem to add value to predictions by market watchers and oil experts who have suggested that oil prices were heading for a repeat of what happened in 2008, when oil reached an all time price of $146pb.

According to an expert's analysis of the recent price trends, he categorically stated that 'Oil prices will always be volatile, but business leaders need to accept we are heading for a world where oil priced in excess of $100 a barrel becomes the norm rather than the exception.

Those who react quickest to this new reality, whether it is through the adoption of new green travel strategies, investment in electric vehicles or a renewed focus on energy efficiency, will inevitably prosper. Those who ignore it will be condemned to experience the déjà vu of repeatedly kicking themselves every time oil prices hit a new record high.'

In Ghana, such volatility in oil prices have been a quagmire for government, which   is often torn between incurring the wrath of the people by making them pay the legitimate prices or absorbing the build ups, and further stress its purse.

While the latter option is often considered, taking into account the level of passion with which petroleum price increases are discussed, and its attendant socio-economic implications, price increases sometimes become inevitable and Ghanaians are made to swallow the bitter pill.

The National Petroleum Authority ( NPA), a fortnight ago, reviewed petroleum prices upwards, of between 25% and 30% as a result of rising world crude prices.

This was met with strict resistance from the public and industry who had questioned the justification for such level of increases.

While industry believe the increases would further increase their production cost and make them uncompetitive, the general public outcry had to do with the socio-economic impact of the increases.

But government had justified the increases, in view of the strangulating effect the TOR Debt is having on the economy, explaining that the increases were also due to increases in the TOR debt recovery levy from 2 Ghana pesewas to 8 Ghana pesewas on petroleum products, which had received improvement by parliament.

Considering the current trend of prices on the world market, and if government decides not to absorb some of the cost, then Ghanaians would have to gird their loins for another price increases, anytime soon.

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