NDC Making The Same NPP Mistakes On Prices of Petroleum Products

In the Summer of 2009 I wrote an article on Ghanaweb titled On Prices of Petroleum Products and NPP hypocrisy that exposed the unprincipled and outright dishonest position of the NPP opposition on the 30% petrol price increase in June, 2009. My article clearly justified the increase using data from the US Energy Information Administration website. I am therefore, shocked that the NPA has decided to increase prices of petroleum products again even though my calculations below which are not different from what I did in the Summer of 2009 show that the NPA’s decision is not justified and is outright wrong. First and foremost, the lie that the government subsidizes the prices of petroleum products (gasoline/petrol, diesel/gas oil and kerosene) must stop. This was one big lie for which I attacked the NPP when they were in power and the NDC are repeating the same big lie. I am ready to expose the NDC if they don't stop this nonsense which I heard the Deputy Minister of Energy spewing out on Joyfm yesterday. There is a GNA report on Ghanaweb yesterday that "A liter of diesel is selling at GHc1.534p whilst super is also selling at GHc1.520p per liter. A gallon of diesel sells at GHc6.91p and super also goes for GHc5.64 per gallon at the Market Circle Total filling station". 1. Even though the Imperial gallon is 4.54 liters, the petrol/gasoline stations in Ghana have adjusted their pumps to deliver 4.5 liters to the Imperial gallon. This means that for 4.5 liters of super petrol sold in Ghana the price that should be paid by the customer will be GHc 6.84 (GHc 1.52 *4.5) and not GHc 5.64 as reported by the GNA above. The price of an Imperialgallon of diesel reported by the GNA is however, for all practical purposes correct at GHc 6.91 (GHc 1.534*4.5 = GHc 6.903). 2. From the US Energy Information Administration website, the highest retail price(including taxes) of premium gasoline/petrol (equivalent to super petrol in Ghana) as of January 3, 2011 was US$3.54/US gallon. This quoted price was in San Francisco and US $ 3.16/US gallon in Houston where I live, with Denver registering the lowest at US$ 3.04/US gallon. 3. The US gallon is 3.78 liters, so using the San Francisco price (for maximum effect), a liter should sell at US$ 0.93651. At US$ 1.00 = GHc 1.44 this should give the equivalent of GHc 1.35/ liter or GHc 6.07/Imperial gallon. 4. How can US companies be making huge profits by selling gasoline/petrol at prices lower than in Ghana (6.07/6.84 * 100= 89% of Ghanaian price) and the Deputy minister claim petrol is subsidized in Ghana? 5. This trick of using European petrol/gasoline prices to fool Ghanaians won't cut it with some of us. For example, on October 18, 2010 when premium gasoline/petrol price including taxes averaged US$ 3.07/US gallon in the USA, the prices on a US gallon basis for Belgium was US$ 7.44, US$ 7.17 for France, US$ 7.30 for Germany, US$ 7.20 for Italy, US$ 7.89 for Netherlands and US$ 7.10 for the UK. 6. It is important to note that petrol/gasoline prices are very high in Europe simply because of taxes as the spot prices (in US$/US gallon) of conventional regular gasoline/petrol on September 3, 2010 show: (i) New York Harbor, US$ 1.9378; (ii) U.S. Gulf Coast (includes my home state Texas), US$ 1.9253; (iii) Los Angeles, US$1.9478);(iv) Rotterdam (Netherlands), US$ 1.9787, and (v) Singapore, US$1.9571 7. Although regular gasoline/petrol spot prices were quoted in (6) above, it should be noted in the US, the maximum difference between regular add Premium is US$0.20. In fact most cars and SUVs run on regular; the exceptions being Acura, VW Tuareg etc which run on premium. Also note that Rotterdam (Netherlands) with the highest spot price of US$ 1.9787/US Gallon if US$0.20 is added to adjust to the premium gasoline/petrol price, this works out to US$ 2.1787/US Gallon spot price. However, the retail price shoots from nearly US$2.12 to US$ 7.89 after taxes etc as shown above!!!!! 8. Again from the US Energy Information Administration website, from 2000 to 2009, the average retail price of regular gasoline/petrol in the US was US$ 2.09/US gallon. The price may be broken down as follows: i. Crude oil price = 51% (US$ 1.07/US gallon) ii. Federal and State taxes = 22% (US$ 0.46/US gallon) iii. Refining costs and profits = 15% (US$ 0.31/US gallon) iv. Distribution and marketing costs and profits = 12% ((US$ 0.25/US gallon) The average retail price per US gallon in 2009 was US$ 2.34 with the following breakdown: i. Crude oil price = 61% (US$ 1.43/US gallon) ii. Federal and State taxes = 18% (US$ 0.42/US gallon) iii. Refining costs and profits = 11% (US$ 0.26/US gallon) iv. Distribution and marketing costs and profits = 10% (US$ 0.23/US gallon) By November 2010 the average retail price per US gallon had gone up to US$ 2.86. The breakdown is as follows: i. Crude oil price = 71% (US$ 2.03/US gallon) ii. Federal and State taxes = 14% (US$ 0.40/US gallon) iii. Refining costs and profits = 5% (US$ 0.14/US gallon) iv. Distribution and marketing costs and profits = 10% (US$ 0.29/US gallon) 9. Now according to the NPA’s Price build-up for premium petrol sold in Ghana released on April 1, 2009 i. Ex-refinery/import parity = 64.03% ii. Taxes and levies = 12.75% iii. Marketers’ margin = 23.22% The question for the NPA is rather simple. Of the 64.03% for the Ex-refinery, what fraction goes to take care of the price of crude oil as shown for the US in (8) above? 10. President Mills should intervene and stop this big lie and con game since I sincerely believe he is an honest person unlike the type of leadership Ghanaians had to endure from January 2001 – January 2009. This is free advice from a person who thinks he has done a lot for Osagyefo Kwame Nkrumah so far, and doesn't want to be forced to turn against him.