Despite the continuous drop in oil prices globally, prices in Ghana remain unchanged against the wishes of many consumers who are expecting to see a reduction in fuel prices at the various filing stations in the country.
Over the past few days, however, there have been speculations that fuel prices may reduce in the country later this week or the next.
But the Executive Secretary of the Chamber of Petroleum Consumers-Ghana (COPEC), Mr Duncan Amoah, says the situation may remain the same. That is no reduction in prices at the pump, in spite of the drop in global prices coupled with the relative stability of the cedi in the exchange rate market, which are major component in petroleum price build up in Ghana.
Fall in demand for fuel
He explained that there has been a drastic fall in the demand for fuel in the country which will make it difficult for the OMCs to reduce their prices because of the impact that the Covid-19 is having on their operations.
“We would have expected a little more reduction to bring prices to around GH₵3.90, GH₵3,85 per litre, but you also talk to the importers, the oil marketing companies and you get the understanding that demand has actually gone down so drastically due to the few lockdowns that we had and also the fact that economic activities have hardly picked up from where it was prior to the lockdown because of Covid-19”, he explained.
Mr Amoah made these observations while speaking on Joy New’s ‘Business Live’ programme, which was monitored by the Ghana Talks Business, last Tuesday, April 28, 2020.
OMCs operating at a high cost
He further explained that the Oil Marketing Companies (OMCs) are currently incurring a lot of cost as a result of the decline in demand which is about 30 percent.
“If you did check their volume last week, you will get the understanding that a lot of them who were probably even doing one million in some situations, today can hardly survive 100 thousand”, he said. Further explaining that in addition to fixed costs, the OMCs have high overheads which they ought to meet. Thus it will be difficult for them to quote low prices that will eat into their margins
Current world oil prices
Currently WTI Crude, which was trading negative, has now bounced back to be selling at $14.17 per barrel.
The continuous fall in prices is largely due to a drop in the demand for the product because of the Covid-19 pandemic. However, this is expected to change as the US economy plans to reopen it’s economy which would then mean that factories will resume operations.
Also, prices for Brent Crude have begun picking up, that is from $18 to now trading at $21.32 per barrel, but experts have forecasted that the prices may double by December, this year.