There is going to be a huge drop in Ghana’s oil revenue if global Oil prices continue to remain low, Executive Director of Institute of Energy Security (IES), Paa Kwasi Anamua Sakyi, has predicted.
He again adds that the decline in oil revenue will have dire consequences on the funding for the free senior high school education policy and other key sectors of the Ghanaian economy.
Drop in Global Oil prices
On Monday, March 9, 2020, Reuters report indicate that Oil prices have dropped to its lowest prices since 1991.
This, they say, is as a result of the “Crude war” ongoing between Saudi Arabia and Russia.
Saudi Arabia began a price war with Russia by reducing its selling prices and pledging to unleash its pent-up supply onto a market reeling from falling demand because of the coronavirus outbreak.
Prior to this huge reduction, crude prices have been relatively stable.
With this latest reduction, prices are generally expected to go down significantly at the various pumps, to ease pressure on consumers.
Despite this, Mr Sakyi, while speaking on an Accra based ŕadio station, further forecasted that fuel prices at the pump will remain same or drop marginally.
“From the beginning of the year crude oil price was US$65 per barrel. By the close of trading last week, it was hovering around US$45, that means there have been more than 35% fall in the price”, Mr. Anamua Sakyi said.
However, he said “I do not see fuel price falling at the pump anytime soon; in the worst-case scenario it is going to stay the same or we will see a marginal reduction but not a substantial one to match with the international fall in price in both crude and fuel prices”.
In addition to this, he says “If we use today’s price of US$30, then the fall in international price of crude oil is more than 50% since the beginning of the year.
“We’ve seen the cedi appreciating by more than 5.6% from the beginning of the year, yet the local pump price has not gone down by more than 5% from the beginning of the year.
“That’s woefully inadequate; one will have expected that these two key variables – the international price of crude oil and also the local currency appreciation against the US dollar – will have given consumers some form of relieve”, he stated.
Impact of Coronavirus
The drop in the oil prices, he also said, could be attributed to the coronavirus outbreak which has hit the Chinese and global economy hard.
“We understand what the coronavirus has done to us; there’ve been travelling restrictions, a lot of flights have been canceled, a lot of shops and production outlets in China, and around China have been closed.
“There has been less demand for oil, that is why we’ve seen a drop in oil price in the past three months”, he explained.