Features
Oil prices and developing countries
The effect of crude oil prices on the economies of countries is a very unpleasant experience that does not only negatively affect economic growth but also brings about disastrous consequences that can also lead to unexpected political upheavals and cause havoc for a number of people.
When the prices of crude oil begin to rise, it results in inflationary trends that bring about high prices of goods and services even in countries that are economically well off. This is an unfortunate situation in which many developing countries find themselves and are expected to cope with whether they like it or not.
FUEL PRICES
The past few weeks have seen crude oil prices fall, for which reason the cost of fuel has become a bit more bearable.
It is not that fuel prices are being sold at very low prices, but compared to previous times, these fuel prices can be described as better.
PRODUCTION CUT
It is high fuel prices that have made economic life unbearable in both developed and developing countries. In the case of developing countries, many budgets have been thrown out of gear. This unfortunate situation is likely to arise again because Organisation of the Petroleum Exporting Countries (OPEC) wants to cut down on the production of crude oil. When this happens, the prices of fuel will start rising again.
In the case of Ghana, the gold for oil policy being implemented by the Akufo-Addo and Bawumia administration is yielding positive results, but if crude oil prices in the world market continue to rise because of production cuts by OPEC, the stable prices in Ghana may start rising again.
OPPOSITION’S COMMENTS
We have heard comments from the opposition that the government should not take any glory for the current fall in fuel prices. Their argument is that if world oil prices begin to go up, the inevitable result will be rising fuel prices.
While this is true, if things go bad because of rising crude oil prices on the world market, the effect will be unpleasant for all Ghanaians, not just a section of them.
Why don’t we think about the country before any other political consideration?
GOLD FOR OIL
The gold for oil policy is good because it has helped to reduce pressure on the dollar. This pressure reduction has helped stabilise the cedi, preventing any sharp rise in oil prices in the country.
If OPEC carries out its production cut, the effect on the global economy particularly that of developing countries, will be very disastrous.
Already, oil prices have surged after several of the world’s largest exporters announced surprise cuts in production. The price of Brent crude oil is trading above $84 a barrel after jumping by almost six per cent.
ECONOMIC CONSEQUENCES
This is not pleasant news because of its unbearable economic consequences for developing countries, many of which are struggling to find their economic levels.
Economists warned that higher oil prices could make it harder to bring down the cost of living. But the RAC motoring group said it does not expect petrol prices to rise unless the higher oil price is sustained over several days.
UNSYMPATHETIC OPEC
Brent crude prices rose after Saudi Arabia, Iraq, and several Gulf states said on Sunday they were cutting output by more than one million barrels of oil a day. It seems as if, in the world of today, OPEC does not care about the plight of developing countries, but how much money they can make for themselves alone.
In addition, Russia said it will extend its cut of half a million barrels per day until the end of the year.
Energy giants BP and Shell saw their share prices rise on Monday, with both rising more than four per cent.
DEVELOPING COUNTRIES
Developing countries, including those in Africa, must know who their true friends are. If things are to continue this way, then countries in the developing world, including Ghana, will be pushed to the wall.
It is our expectation that OPEC will not continue with its decision for long in order to give some breathing space to all developing countries, including those in Africa.
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Pradmat201@gmail.com (0553318911)
BY DR KOFI AMPONSAH-BEDIAKO