Oil Price Fall: Pressure On Nigeria As Countries Reduce Prices of Fuel

AS the prices of crude oil continued to be on the downward slide, some economies around the world are now paying less for Premium Motor Spirit (PMS), with Nigerians yet to experience the downward price review trend.

For instance, the price for United States regular PMS has fallen 11 weeks in a row to $2.55 per gallon as of December 15, down by $1.16 per gallon from its 2014 peak in late April and the lowest price since October 2009.

Also, petrol price fell in the U.K to an average of 122.9p a litre last month and has dropped closer to the 120p a litre mark since then.
Jonathan at Second Term Declaration
The fuel pump price in Venezuela as at December 15, was $0.02 per litre; Syria, $0.05; Saudi Arabia, $0.16; Kuwait, $0.24; Iran, $0.26 per litre; N97 per litre in Nigeria.

In the country, figures from the Petroleum Products Pricing Regulatory Agency (PPPRA) as at December 15, showed that the landing cost of fuel is N98.15 per litre; expected open market price, N100.66 per litre; ex-depot price, N81.51 per litre; regulated price of product, N97 while the Federal Government is paying subsidy of N3.66 per litre.

The U.S Energy Information Administration (EIA) expects fuel prices in the U.S to go even lower in 2015.

The agency noted yesterday in a statement that fuel prices in the U.S are falling because of lower crude oil prices, which account for about two-thirds of the price U.S. drivers pay for a gallon of gasoline.

Global crude prices have dropped by more than 40 per cent since July from $115 per barrel to an average of $65 a barrel in December.

As at Thursday, the price of Organisation of Petroleum Exporting Countries (OPEC) basket of twelve crudes stood at $55.64 a barrel on Wednesday, compared with $55.91 the previous day.

EIA said the average U.S. household is expected to spend about $550 less on fuel in 2015 compared with 2014, as yearly motor fuel expenditures are on track to fall to their lowest level in 11 years.

It noted that lower fuel expenditures are attributable to a combination of falling retail gasoline prices and more fuel-efficient cars and trucks that reduce the number of gallons used to travel a given distance.

It stated: “Household fuel costs are forecast to average $1,962 next year, assuming that EIA’s price forecast, which is highly uncertain, is realized. Should the forecast be realized, motor fuel expenditures (gasoline and motor oil) in 2015 would be below $2,000 for the first time since 2009, according to EIA’s December 2014 Short-Term Energy Outlook (STEO).

Back home in Nigeria, Labour Congress, NLC, has called on the Federal Government to reduce the pump price of petroleum products in line with falling crude prices in the international market as has been done by other importers of refined petroleum products.

General Secretary of NLC, Dr Peter Oso-Eson, said NLC was worried that though the nation was actually at war, the body language of the country’s political leaders did not suggest so, lamenting that Nigeria was increasingly witnessing wanton and arbitrary exercise of power by political leaders.

According to him, the area that worries us very seriously is that crude prices are falling. In order countries, what that is immediately translating to, is that the price of petroleum products and pump head is coming down. In the United States, in the last one month, the price of a gallon of petrol, has come down from $3 to $2, in response to this price adjustment. In our country, we are not allowed to enjoy that benefit. What government is doing is that in order to shore up its naira revenue, it has gone to devalue excessively, the naira; $13 devaluation in one day, and then a continuous process of depreciation.

“What that does, is that, because we import petroleum products largely, the gains from the falling price of crude which ought to translate to consumers, is prevented by that devaluation; because, by devaluing the cost of the head price, it might even increase.
The StreetJournal however, recalls that Sheu Yar Adua was the only Nigerian president, living or dead, that reduced fuel price from N65 to N60 in 2007.
It was however, argued that it was the reduction of the pump price of fuel from #65 to #60 that triggered the increase in subsidy payments. Analysts are of the opinion that Yar’adua used that reduction to gain some level of legitimacy, following wide condemnations that trailed his election

Author: News Editor

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