Iran War: Analyst Outlines 3 Key Things Ghana Must Do to Prevent Future Fuel Price Shocks
With Ghanaians set to be hit with the force of the energy insecurity brought on by the war on Iran, an analyst has explained the three things Ghana needs to do to guard against future shocks
Ghana is set to see a major increase in fuel prices because of the US/Israel war on Iran in the next pricing window, after March 15.
Oil prices are currently at around $90 per barrel and have gone close to $120 per barrel in recent times.
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Iran, Israel and the U.S. have all struck oil and gas facilities, worsening supply concerns.
On Monday, Brent crude oil, the international standard, surged to as high as nearly $120 a barrel, before falling to under $90 after US President Donald Trump suggested the war could be near an end. But attacks have continued to escalate since.
The Chamber of Oil Marketing Companies has suggested that fuel prices in Ghana could surge to as high as GH¢17 per litre if the ongoing crisis in the Middle East does not ease in the coming days.
Energy analyst Benjamin Nsiah outlined three key things Ghana must do to prevent fuel price shocks like the war with Iran in the future.
What Ghana can do to prepare for future fuel shocks
Integrating the upstream and downstream sectors
In the short term, Ghana needs to make the most of the oil it produces locally, said Nsiah.
He explained that the government could pursue deals that ensure that refineries in Ghana get access to oil produced in Ghana.
"Because we are an oil producer and we also have refineries locally, most of our petroleum agreements must have some sections that force our international oil companies to sell these products to our local refineries.”
Diversify energy needs
In the medium to long term, Nsiah stressed the importance of Ghana diversifying its energy needs.
This would protect Ghana from some of these energy shocks hat has the global economy on edge.
"Ghana must fast-track its way towards renewable energy, so we insulate ourselves from some of these external shocks. It makes us energy secure and self-reliant.”
"When we have had our energy sources being mostly transitional or renewable, we wouldn’t have been hit hard by some of these global shocks.”
Nsiah noted that the government would have to take the lead in this energy transition, paving the way for increased adoption of electric vehicles.
"If you are able to scale up your renewable or transitional energy, it also helps you to get a lot of electric vehicles into the system so that when prices of these products increase on the international market, you are safe because your transport sector doesn depend soley on fossil fuels to power it.”
Reserving strategic stock
Linked to the earlier point about refining, Nsiah also highlighted the importance of the state investing in reserves of fuel stock.
Without reserves, Ghana will remain vulnerable to shocks on the external market, he added. At the start of the war, Ghana was said to have five weeks of fuel stock at the time the war started.
Nsiah singled out the Bulk Oil Storage and Transportation Company Limited in this regard, which he said is not living up to its mandate.
"We need to critically retool BOST, look at its core mandate and operations and ensure that if there are certain resources we need to allocate to them to be able to hold the stock of six weeks, we should.”
"Assuming BOST had stored, Ghana would be talking about 11 weeks or almost 12 weeks of stock. That is about three months.”
Source: YEN.com.gh
