How Ghanaians can benefit from reduction in world crude oil price

Ghanaians are expected to pay more for fuel as oil marketing companies prepare to adjust prices upwards at the pumps.

Such an increase will, as expected, have a significant impact on their standard of living, with many now slipping below the poverty line. But what can the government do to ameliorate such frequent hikes when the world crude oil price is dropping?

The global crude oil price is finally cooling down. OPEC has cut back its forecast for global oil demand for the rest of 2022 and 2023. The oil cartel announced that it would slash crude oil production targets for October by 100,000 barrels per day.

The group of oil producers expressed concerns over weakened demand, and slipping prices due to the slowdown of the global economy. Global economic growth is weak with consumers and manufacturers battling with inflation and central banks raising interest rates to cool down inflation.

The world’s 2nd largest economy is in a bad shape. China has locked down 65 million of its citizens under its “zero COVID-19” policy and is discouraging domestic travel during upcoming national holidays. Making the situation with the Chinese economy worse.

Iran is close to signing a nuclear deal with the west and will be introducing more crude oil into the global supplies. Hence, OPEC’s decision to cut daily production of crude to balance the market.

In light of these developments, Brent crude oil price has fallen to below $100 per barrel from the March high of $147 per barrel.

But instead of Ghanaians enjoying the reduction in crude oil price, we are faced with a price hike. It is a result of the government’s inability to take advantage of the opportunity presented by the market. Thus, forfeiting Ghanaians the relief they need.

This is the time the country needs a long-term purchase plan to source petroleum products. Ghana should hedge these products with a reliable refinery and sign a long-term contract if our only refinery is unstable.

This will protect the country against the fluctuations of fuel prices due to the volatility of the world crude oil market and stabilize the economy. The necessary steps must be taken urgently by the government to give Ghanaians a break at the pump. And take advantage of the opportunity presented by the market to purchase fuel at a reduced price. Thereby passing the benefits of the cost reduction of crude oil to Ghanaians.

Potentially, prices of the most common petroleum products would be reduced and stabilized with a long-term contract with a reliable refinery. This will ensure Ghanaians benefit from the reduction of the world crude oil price especially as we enter the Christmas holidays.