Economist and University of Ghana senior lecturer, Dr George Domfeh, has renewed the debate over the factors driving fluctuations in fuel prices in Ghana, arguing that movements in the global crude oil market have been a major influence.
Dr Domfeh, who is also the Founding President of Africa Policy Lens, said the recent rise in petrol prices has vindicated his earlier argument that the sharp decline in pump prices recorded at the beginning of the year was largely influenced by lower international crude oil prices.
In a social media post, Dr Domfeh recalled that petrol prices had fallen to about GH¢10 per litre earlier in the year, a development he said was at the time attributed by President John Dramani Mahama to the government’s economic management.
However, Dr Domfeh said he had argued that the decline could not be attributed solely to domestic economic management, pointing instead to the significant drop in international crude oil prices during the period.
According to him, Brent crude was trading at approximately US$58 per barrel when petrol prices were around GH¢10 per litre.
He said the subsequent increase in global crude oil prices, coupled with a rise in Ghana’s domestic petrol prices, had strengthened his earlier position.
“Today, Brent crude is around US$103 and petrol is back around GH¢17 per litre,” Dr Domfeh wrote.
He described the development as “vindication” of his argument and suggested that the global oil market had played a more significant role in the movement of fuel prices than claims of domestic economic intervention might suggest.
“Vindication! It appears the real economic manager was the global oil market—not any special magic at home,” he stated.
The pricing of petroleum products in Ghana is influenced by a combination of international and domestic factors.
International crude oil prices are among the key external factors, while exchange-rate movements, taxes and levies, refining costs, transportation and other components of the petroleum pricing structure also affect the final price consumers pay at the pump.
A change in the international price of crude oil, therefore, does not automatically translate into an equivalent change in domestic petrol prices, as other components of the pricing structure can either amplify or cushion the impact.
Dr Domfeh’s intervention nevertheless highlights the relationship between global crude oil prices and domestic fuel costs and challenges the extent to which reductions in pump prices should be attributed exclusively to government economic management.
His latest comments come against the backdrop of a reported increase in Brent crude from around US$58 per barrel earlier in the year to approximately US$103, alongside a rise in petrol prices from about GH¢10 to GH¢17 per litre.
The comparison forms the basis of his argument that external market conditions are a significant factor in the earlier decline in fuel prices and the subsequent increase.
The comments are expected to add to the broader public debate over the extent to which government policies can influence fuel prices in Ghana, particularly in periods of significant volatility in the international oil market.
By 1960news.com
