20 December 2012

Namibia: Oil Will Not Spoil Christmas

This festive season, travellers can find delight in the fact that fuel prices will remain unchanged. According to the Minister of Mines and Energy, "global oil markets remain volatile and the future of oil remains uncertain". Despite international conditions, the ministry affirms that pump prices at various inland destinations countrywide will remain unchanged.

The September-December period has shown a downward trend with Brent crude oil decreasing from US$115 to US$110 and West Texas Intermediate from US$95 to US$88 per barrel with minimal fluctuations. According to the ministry, this decrease is in anticipation of the fiscal cliff outcome negotiations.

The cease fire agreement between Hamas and the Israeli government prevented prices from shooting up contrary to previous geopolitical speculation. "There is a substantial amount of supply in the market with no prospects of shortages or disruption". Despite the depreciation of the Namibia dollar against the US dollar, crude oil prices within Namibia remain stable as the weaker Namibia dollar was counteracted by the lower oil prices.

According to the minister, the National Energy Fund has pledged funds to build an oil storage facility in Walvis Bay to ensure future security of oil supply during hard times. This, unfortunately is hinged on investment provision for this project. The Ministry of Mines and Energy has therefore granted a 5 cent per litre grant to the national energy fund. Dealer margin have further been increased to 4 cents per litre to cover the operational costs of fuel retailers.

All in all, the present Walvis Bay fuel prices for controlled petroleum products will remain unchanged with 93 leaded petrol at N$10.34 per litre, 95 unleaded petrol N$10.47 per litre and diesel remaining N$11.04 per litre.

Despite the current neutral market conditions, the Namibian population may have to brace itself next year. Petroleum analysts are reluctant to tie their forecasts too closely to a single outcome. The so-called Fiscal Cliff negotiations in the USA, many analysts point out, carry the potential to disrupt markets severely with a commensurate impact on oil, gold, an inflation in general.

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