Ghanaian Consumers Protected from High Crude Oil Prices

Prices Are About 80 Percent Higher Than A Year Ago
Oct 12, 2004 -- Crude oil prices breached the $54 mark Tuesday to reach a new all-time high, fueled by continuing worries over supply in Nigeria and reduced output in the hurricane-hobbled Gulf of Mexico.

However, the Ghanaian consumer is paying the same price for gas as he did a year ago.

In August, the energy minister, Dr. Paa Kwesi Nduom, assured Ghanaians that petroleum prices will not go up even in the face of rising crude oil prices. He said the government has introduced some measures including sourcing funds from other sectors of the economy to support the energy sector, which would not affect the economy in any way.

The Governor of the Bank of Ghana (BoG), Dr Paul Acquah, supported the government's position with the following remarks: "....export earnings, foreign exchange inflows such as remittances and the country?s payment position, were enough to cushion the economy against the increasing oil prices."

Economists have, however, warned government of the consequences of retaining the local price despite hikes in world price of crude.

High prices are beginning to slow the world economy and encourage energy saving measures in China, the International Energy Agency said. The Paris-based IEA cut its forecast for world oil demand growth next year by 320,000 barrels a day to 1.45 million bpd, forecasting global consumption at 83.85 million bpd.

Crude for November delivery on the New York Mercantile Exchange reached a new high of $54.10, after settling overnight at $53.64. Brent crude for November broke through the $51 mark for the first time to reach $51.10.

While oil prices are about 80 percent higher than a year ago, they are more than $26 below the peak inflation-adjusted price reached in 1981. Underlying daily jitters is that excess available output is scant, with global production capacity only about 1 percent above the daily supply of 82 million barrels.

In Nigeria, a nationwide strike to protest higher fuel prices began Monday, shutting down most of Lagos, Nigeria's commercial capital. The country's output of 2.5 million barrels per day has not been affected yet but traders remained concerned.

Nigeria produces low-sulfur crude - currently in high demand - and analysts said the prospect of losing output there is particularly worrisome.

The four-day strike takes place just after a militia group and the government reached a tentative peace deal.

Previous efforts by the Organization of Petroleum Exporting Countries, which already produces close to 30 million barrels daily, to boost output have involved crude with a high-sulfur content, which is less desirable for refiners.