Ghana: Cost of living worsens as fuel prices rise

The cost of living in Ghana is expected to get worse after another increase in oil prices. This development comes just days after the Public Utilities Regulatory Commission (PURC) announced increases in utility rates effective July 1.

Fuel price increases typically lead to increased costs for goods and services, especially those that rely on trucks for transportation. Some oil marketing companies have already adjusted their prices: Shell is now selling a liter of petrol and diesel at GH₵14.84, while GOIL has raised its petrol price to GH₵14.60 from GH₵14.55 and diesel price to GH₵14.75 from GH 14.70.

The recent rise in petroleum products is primarily due to an upward adjustment of the UPPF (Unified Petroleum Price Fund) margin following a directive from the National Petroleum Authority (NPA) to increase the margin from June 1, 2024. More oil marketing companies are expected to follow suit and raise their pump prices .

Market observers are questioning the rationale behind the NPA directive, which has denied consumers some relief despite a fall in global crude oil prices. In addition, there are concerns that the global price of crude oil could rise in the coming months as oil producers cut production.

The Organization of the Petroleum Exporting Countries and its allies, including Russia (OPEC+), agreed on Sunday to extend most of their deep oil production cuts well into 2025. The move aims to stabilize the market amid slow demand growth, high interest rates and increased production in the USA.

Recently, Brent crude oil prices have been trading near $80 a barrel, below what many OPEC+ members need to balance their budgets. Concerns over slow demand growth in China, a major oil importer, and rising oil inventories in developed economies have also weighed on prices.

Currently, OPEC+ members are cutting production by a total of 5.86 million barrels per day (bpd), or about 5.7% of global demand. This includes 3.66 million bpd of cuts due to expire at the end of 2024 and voluntary cuts from eight members totaling 2.2 million bpd that expire at the end of June 2024.

On Sunday, however, OPEC+ agreed to extend cuts of 3.66 million bpd by a year until the end of 2025 and extend cuts of 2.2 million bpd by three months until the end of September 2024. This decision has sparked fears that, that global crude oil prices may rise, denying consumers in Ghana any chance to enjoy price reductions in the near future.

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