Institute of Energy Security predicts 5% to 8% drop in fuel prices from today

The Institute of Energy Security (IES), has projected about 5% and 8% decrease in the prices of fuel at the pumps from Monday (March 16, 2020).

A motorist holds a fuel pump at a Gulf petrol station in London,  file. REUTERS/Luke MacGregor/File Photo

This is coming after the global crude oil prices dropped and the cedi also being relatively stable against major foreign currencies. These are two major determinants for the prices of fuel at the pumps.

The IES prediction is different from that of the regulator, the National Petroleum Authority, NPA, which has said that prices may go down by 15%.

The IES explained that the reason for the reduction is due to the drop in global crude oil prices which slumped to a region of $30 a barrel as of March 9.

This was caused by the price war between Saudi Arabia and Russia.

The impact of the coronavirus has also caused a drop in global demand for crude oil after economic activities slowed down in most countries affected by the pandemic.

For the first pricing window spanning Sunday (March 1, 2020) to Sunday (March 15, 2020), a litre of petrol or gasoline sold for GHC5.36 pesewas.

This translated into GHC20.29 pesewas for a gallon of petrol at major Oil Marketing Companies.

A litre of diesel during the same period was sold at GHC5.38 translating into GHC20.37 pesewas for a gallon of the product.

By this calculation, if OMCs reduce their prices by 5%, it means a litre of petrol will be selling for GHC5.09 which will translate into GHC19.27 per gallon.

A 5% reduction in the price of diesel will mean that consumers should be paying 5 cedis 11 pesewas which will cost 19 cedis 34 pesewas for a gallon of diesel.

But if fuel prices record an 8% reduction, the OMCs will reduce prices by 43 pesewas on a litre of petrol to sell at GHC4.93. This will lead to GHC18.66 per gallon.

This also means that the current price of diesel GHC5.38 will drop to GHC4.95.

This will mean consumers will have to pay 18 cedis 74 pesewas for a gallon of the product.

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