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04.05.2006 Editorial

Lazing about economy ...Oil Price Up ... and the tensions thereof

By Chronicle
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By last Tuesday evening, it had become clear that the government had decided to burden Ghanaians yet again this year, with additional increases in the prices of petroleum products.

Surprisingly, it is being made to appear that even the Professor Addae-Mensah-chaired National Petroleum Authority (NPA) and the government that fixed the new prices had no hand in the increases.

Even though petroleum price fixing is now under the direct control of the NPA, in conjunction with the government (signifying state regulation), the petroleum sector is still trumpeted to have been deregulated and therefore neither Government nor the NPA must bear responsibility for price increases.

It is sad to note that we are being told that oil marketing companies (OMCs) are fixing prices, when all they are doing now is just making negligible adjustments within the margins granted them. How ridiculous!

Reducing their margins by either a hundred or five hundred cedis does not make OMCs responsible for the around 10 percent increase in prices!

If in spite of all the postulation about the economy, it is unable to absorb the shocks arising out of the current levels of increases in world market price of crude oil and petroleum products, then something must be wrong.

Either something is wrong with the state of the health of the economy, as presented to Ghanaians, or there must be something wrong with the managers of it. How ironic that the increases were made a day after workers had poured out their hearts about the pitiable living standards the majority of them find themselves in, due to low remunerations and the need to cushion them.

Transferring additional costs of products onto their retail prices is a common open market practice. But even there, astute business people and organizations absorb some of these costs, when they would not significantly affect their margins, and they reckon that passing on such costs would make prices a little more expensive.

At a period when we have increasingly improved on our cocoa output, and prices have also seen improvement, whilst at the same time gold prices have hit an over twenty-year high, it is inconceivable that government would still want to maintain the levels of taxes on a sensitive product like petroleum products, regardless of its rippling effects on the whole economy.

Rather than doing some deep thinking about the options available, our managers have decided to go for the quick-fix 'laziest' option; taking advantage of the world market price increases to raise more revenue, regardless of the consequences of such a decision, by maintaining the tariff levels on the products.

The Chronicle once again draws government's attention to the fact that it may not be difficult at all to mobilize revenue through taxes and levies on petroleum products. However, the tensions that such a policy brings have always had far-reaching effects that no amount of statistics we churn out can calm.

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