Drop in Global Oil prices: Ghana to lose huge oil revenue, free SHS to suffer

There is going to be a huge drop in Ghana’s oil revenue if global Oil prices continue to remain low, Executive Director of Institute of Energy Security (IES), Paa Kwasi Anamua Sakyi, has predicted.

He again adds that the decline in oil revenue will have dire
consequences on the funding for the free senior high school education policy
and other key sectors of the Ghanaian economy.

Drop in Global Oil prices

On Monday, March 9, 2020, Reuters report indicate that Oil prices have dropped to its lowest prices since 1991.

This, they say, is as a result of the “Crude war” ongoing
between Saudi Arabia and Russia.

Saudi Arabia began a price war with Russia by reducing 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 reduction, crude prices have been
relatively stable.

With this latest reduction, prices are generally expected to
go down significantly at the various pumps, to ease pressure on consumers.

Despite this, Mr Sakyi, while speaking on an Accra based ŕadio station, further forecasted that fuel prices at the pump will remain same or drop marginally.

 “From the beginning
of the year crude oil price was US$65 per barrel. By the close of trading last
week, it was hovering around US$45, that means there have been more than 35%
fall in the price”, Mr. Anamua Sakyi said.

However, he said “I do not see fuel price falling at the
pump anytime soon; in the worst-case scenario it is going to stay the same or
we will see a marginal reduction but not a substantial one to match with the
international fall in price in both crude and fuel prices”.

In addition to this, he says “If we use today’s price of
US$30, then the fall in international price of crude oil is more than 50% since
the beginning of the year.

“We’ve seen the cedi appreciating by more than 5.6% from the
beginning of the year, yet the local pump price has not gone down by more than
5% from the beginning of the year.

“That’s woefully inadequate; one will have expected that
these two key variables – the international price of crude oil and also the
local currency appreciation against the US dollar – will have given consumers
some form of relieve”, he stated.

Impact of Coronavirus

The drop in the oil prices, he also said, could be
attributed to the coronavirus outbreak which has hit the Chinese and global
economy hard.

“We understand what the coronavirus has done to us; there’ve
been travelling restrictions, a lot of flights have been canceled, a lot of
shops and production outlets in China, and around China have been closed.

“There has been less demand for oil, that is why we’ve seen
a drop in oil price in the past three months”, he explained.

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