NDC making the same NPP mistakes on prices of Petroleum Products

Dear Sir:

In the Summer of 2009 I wrote an article on Ghanaweb titled On Prices of Petroleum
Products and NPP hypocrisy that exposed the
unprincipled and outright dishonest position of the NPP opposition on the 30% petrol
price increase in June, 2009. My article clearly
justified the increase using data from the US Energy Information Administration
website.

I am therefore, shocked that the NPA has decided to increase prices of petroleum
products again even though my calculations below which are not
different from what I did in the Summer of 2009 show that the NPA’s decision is not
justified and is outright wrong.
First and foremost, the lie that the government subsidizes the prices of petroleum
products (gasoline/petrol, diesel/gas oil and kerosene) must stop.
This was one big lie for which I attacked the NPP when they were in power and the
NDC are repeating the same big lie. I am ready to expose the NDC
if they don't stop this nonsense which I heard the Deputy Minister of Energy spewing
out on Joyfm yesterday.

There is a GNA report on Ghanaweb yesterday that "A liter of diesel is selling at
GHc1.534p whilst super is also selling at GHc1.520p per liter. A gallon
of diesel sells at GHc6.91p and super also goes for GHc5.64 per gallon at the Market
Circle Total filling station".

1. Even though the Imperial gallon is 4.54 liters, the petrol/gasoline stations in
Ghana have adjusted their pumps to deliver 4.5 liters to the Imperial gallon.
This means that for 4.5 liters of super petrol sold in Ghana the price that should
be paid by the customer will be GHc 6.84 (GHc 1.52 *4.5) and not GHc 5.64
as reported by the GNA above. The price of an Imperialgallon of diesel reported by
the GNA is however, for all practical purposes correct at GHc 6.91
(GHc 1.534*4.5 = GHc 6.903).

2. From the US Energy Information Administration website, the highest retail price
(including taxes) of premium gasoline/petrol (equivalent to super petrol
in Ghana) as of January 3, 2011 was US$3.54/US gallon. This quoted price was in San
Francisco and US $ 3.16/US gallon in Houston where I live, with
Denver registering the lowest at US$ 3.04/US gallon.

3. The US gallon is 3.78 liters, so using the San Francisco price (for maximum
effect), a liter should sell at US$ 0.93651. At US$ 1.00 = GHc 1.44 this
should give the equivalent of GHc 1.35/ liter or GHc 6.07/Imperial gallon.

4. How can US companies be making huge profits by selling gasoline/petrol at prices
lower than in Ghana (6.07/6.84 * 100= 89% of Ghanaian price) and
the Deputy minister claim petrol is subsidized in Ghana?

5. This trick of using European petrol/gasoline prices to fool Ghanaians won't cut
it with some of us. For example, on October 18, 2010 when premium
gasoline/petrol price including taxes averaged US$ 3.07/US gallon in the USA, the
prices on a US gallon basis for Belgium was US$ 7.44, US$ 7.17 for
France, US$ 7.30 for Germany, US$ 7.20 for Italy, US$ 7.89 for Netherlands and US$
7.10 for the UK.

6. It is important to note that petrol/gasoline prices are very high in Europe
simply because of taxes as the spot prices (in US$/US gallon) of conventional
regular gasoline/petrol on September 3, 2010 show:
(i) New York Harbor, US$ 1.9378;
(ii) U.S. Gulf Coast (includes my home state Texas), US$ 1.9253;
(iii) Los Angeles, US$1.9478);(iv) Rotterdam (Netherlands), US$ 1.9787, and
(v) Singapore, US$1.9571

7. Although regular gasoline/petrol spot prices were quoted in (6) above, it should
be noted in the US, the maximum difference between regular add
Premium is US$0.20. In fact most cars and SUVs run on regular; the exceptions being
Acura, VW Tuareg etc which run on premium. Also note that
Rotterdam (Netherlands) with the highest spot price of US$ 1.9787/US Gallon if
US$0.20 is added to adjust to the premium gasoline/petrol price, this
works out to US$ 2.1787/US Gallon spot price. However, the retail price shoots from
nearly US$2.12 to US$ 7.89 after taxes etc as shown above!!!!!

8. Again from the US Energy Information Administration website, from 2000 to 2009,
the average retail price of regular gasoline/petrol in the US was
US$ 2.09/US gallon. The price may be broken down as follows:
i. Crude oil price = 51% (US$ 1.07/US gallon)
ii. Federal and State taxes = 22% (US$ 0.46/US gallon)
iii. Refining costs and profits = 15% (US$ 0.31/US gallon)
iv. Distribution and marketing costs and profits = 12% ((US$ 0.25/US gallon)
The average retail price per US gallon in 2009 was US$ 2.34 with the following
breakdown:
i. Crude oil price = 61% (US$ 1.43/US gallon)
ii. Federal and State taxes = 18% (US$ 0.42/US gallon)
iii. Refining costs and profits = 11% (US$ 0.26/US gallon)
iv. Distribution and marketing costs and profits = 10% (US$ 0.23/US gallon)
By November 2010 the average retail price per US gallon had gone up to US$ 2.86. The
breakdown is as follows:
i. Crude oil price = 71% (US$ 2.03/US gallon)
ii. Federal and State taxes = 14% (US$ 0.40/US gallon)
iii. Refining costs and profits = 5% (US$ 0.14/US gallon)
iv. Distribution and marketing costs and profits = 10% (US$ 0.29/US gallon)

9. Now according to the NPA’s Price build-up for premium petrol sold in Ghana
released on April 1, 2009
i. Ex-refinery/import parity = 64.03%
ii. Taxes and levies = 12.75%
iii. Marketers’ margin = 23.22%
The question for the NPA is rather simple. Of the 64.03% for the Ex-refinery, what
fraction goes to take care of the price of crude oil as shown
for the US in (8) above?

10. President Mills should intervene and stop this big lie and con game since I
sincerely believe he is an honest person unlike the type of leadership
Ghanaians had to endure from January 2001 – January 2009. This is free advice from
a person who thinks he has done a lot for Osagyefo Kwame
Nkrumah so far, and doesn't want to be forced to turn against him.

Michael Gyamerah, Ph.D., Houston.