The Association of Oil Marketing Companies (AOMCs), has indicated that its members will reduce their fuel prices at the pumps from Monday [March 16, 2020], to reflect market conditions.
The CEO of the Association, Kwaku Agyeman Duah, however failed to mention the percentage of reduction consumers should expect.
Following a drop in global crude oil prices and the relative stability of the cedi for about two months now, there have been calls by the Chamber of Petroleum Consumers and other interest groups for the OMCs to reduce their prices in line with the petroleum product pricing and deregulation policy.
Reports by Bloomberg indicated that as at the dawn of Monday [March 9, 2020], a barrel of crude oil was selling at about $28.
This was a reduction from a region of about $64 a barrel of crude oil early in the year.
Mr. Agyeman Duah in an interview with Citi Business News explained how the OMCs will determine the margin of reduction.
“The next pricing window will see OMCs responding, but the response will not be as drastic as people expect. If this trend continues, then the market will make sure that there is conformity to the price reduction which will see the quantum of reduction increase,” he remarked.
Already, the NPA CEO, Hassan Tampuli has estimated about fifteen percent reduction in fuel prices.
Mr. Agyeman Duah emphasized that they will respond to the reduced prices, but they will be measured in their margin to stay competitive.
“Just Wednesday, the global prices witnessed a marginal rise though it was not astronomical, but just like all of us wanted to see a reduction, the reverse happened, and we do not know what will happen subsequently.”
He added that, “I do not want to quote any percentages so that if the market does not respond accordingly, then we will have to come back to explain. If the trend continues, then the reduction can be sustained, however it could be either above the projections or below them.”
The AOMC boss however dismissed claims that the members have been intentional in revising their ex-pump prices downwards to allow consumers enjoy the benefit.
He among other things explained that the seeming interference by the regulator does not augur well for the industry, especially at a time where it is being operated in a deregulated market where OMCs are at liberty to set prices bearing in mind the effect on competition and response by consumers.
The Chamber of Petroleum Consumers Ghana (COPEC), has also asked the National Petroleum Authority (NPA), to desist from making pronouncements on fuel price movements at the pumps.
World Price Slump
Oil prices saw its lowest drop since 1991 on Monday, March 9, 2020, after Saudi Arabia started a price war with Russia by slashing its selling prices and pledging to unleash its pent-up supply onto a market reeling from falling demand because of the coronavirus outbreak.
Prior to this huge slash, crude prices had been relatively stable. By this, prices are generally expected to go down significantly at the pumps, to ease pressure on consumers.
Brent crude futures fell by as much as $14.25, or 31.5%, to $31.02 a barrel. That was the biggest percentage drop since Jan. 17, 1991, at the start of the first Gulf War and the lowest since February 12, 2016. It was trading at $35.75 at 0114 GMT.
U.S. West Texas Intermediate (WTI) crude fell by as much as $11.28, or 27.4%, to $30 a barrel. That was also the biggest percentage drop since the first Gulf War in January 1991 and the lowest since February 22, 2016. It was trading at $32.61.
Saudi Arabia, the world’s biggest oil exporter, is attempting to punish Russia, the world’s second-largest producer, for balking on Friday at production cuts proposed by the Organization of the Petroleum Exporting Countries (OPEC).