Consumers of petroleum products in the country have breathed a sigh of relief as prices of petroleum products remain unchanged. According to the National Petroleum Authority's (NPA's) latest review of the prices of petroleum products, it maintained the prices against the backdrop of insecurity in Iraq, which pushed a barrel of crude oil to $106.91 as at yesterday.
Crude oil, particularly Brent Crude, was projected by Wall Street analysts to average as much as $116 a barrel by the end of the year. Now, with violence escalating in Iraq, which is the second largest oil producer in Organization of the Petroleum Exporting Countries (OPEC), representing the largest source of growth among the 12 member countries.
The international benchmark surged above $114 on June 13 last week for the first time in nine months, as militants routed the Iraqi army in the north and advanced toward Baghdad, threatening to ignite a civil war. The NPA review took effect from yesterday. This implies that consumers in Ghana would be buying petroleum products at the old prices.
Petrol is still going for GH¢2.73 per litre, diesel GH¢2.68, kerosene GH¢2. 61, premix GH¢1.25 and liquefied petroleum gas (LPG) goes for GH¢ 2. 87 per kilogram. The last time the prices changed was in April 16, this year, when diesel fell by about 4 percent.
Figures from the Ghana Chamber of Bulk Oil Companies indicated that an estimated GH¢40 million would be spent in this price subsidy. So far, the Ghana government has spent about GH¢175 million in the past eight weeks on price subsidies. Oil prices have remained persistently high and volatile in the past few years and according to estimates they may remain so until 2014.
The Brent crude spot price, which averaged US $112 per barrel in 2012, is projected to remain above US $100 per barrel at an average of US $108 and US $101 per barrel in 2013 and 2014, respectively (U.S.). High oil prices may dampen the global economy which is still struggling to recover from the 2008 financial crisis, according to economists.
High oil prices above US $100 can be explained by many factors and they may affect economies in an uneven way, with an unclear outcome for the global economy as a whole. According to estimates by the International Monetary Fund, a 50 per cent increase of oil prices due to a supply shock would lead to a one to 1.5 per cent decrease of output in many regions of the world.