By ADEWALE SANYAOLU with agency report
Oil prices recorded further slide Wednesday to their lowest levels since May 2009, during the administration of the late President Umaru Yar’Adua.
But the development in the global oil market has not led to a decline in the price of Premium Motor Spirit (PMS), which currently sells for N97 per litre as against what is obtainable in other economies where there is a corresponding drop in the price of fuel as a result of the decline in global crude oil price.
Director General, Lagos Chamber of Commerce and Industry (LCCI), Mr. Muda Yusuf, explained that one key benefit of a deregulated system is the competition that comes with it, arguing that, in a normal competitive framework, prices should reflect cost and this would reduce the scope for consumer exploitation.
Regrettably, he said this proposition has not played out in the fuel price in Nigeria, adding that, while global oil price has dropped by about 40 per cent, the currency has suffered a depreciation of about 20 per cent, and therefore a net benefit in terms of lower fuel cost is expected.
‘‘But this has not happened with regard to major fuel used for energy generation – diesel and LPFO. It is important for the relevant authorities to look into this to ensure the transmission of the benefits to consumers. Investors have already been penalised by the exchange rate depreciations; there should be a reward in form of lower energy prices. In most parts of world, energy prices have dropped significantly.”
But the Executive Secretary of Major Oil Marketers Association of Nigeria (MOMAN), Mr. Obafemi Olawore, faulted the position of Yusuf, saying he is not in support of a price cut for petrol because when crude oil price picks up again, it would be difficult for government to increase the price.
‘‘I stand to be challenged on this. And to the benefit of my experience, nobody can beat his chest that he can predict accurately the price of crude oil because the petroleum market is a features market,’’ he said.
In New York, both Brent and US crude significantly pared losses just before government data showed US crude oil inventories fell 1.8 million barrels last week, a bigger drop than analysts’ expectations for a 100,000-barrel dip in stocks.
After initially paring more losses, crude futures pushed lower. US gasoline stocks rose 3.0 million barrels and distillate stocks were up 1.9 million barrels last week, data from the Energy Information Administration (EIA) showed, as refiners lifted capacity utilisation of 0.9 percentage point to 94.4 per cent. The EIA data followed American Petroleum Institute data released on Tuesday that showed an increase in US stockpiles.
Brent February crude was down $1.25 at $56.65 a barrel at 11:09 a.m. EST, after dropping as low as $55.81, its weakest since May 2009. US crude was down $1.02 at $52.92, off its $52.51 intraday low.
Slated for a nearly 49 per cent decline in 2014, Brent’s retreat is set to be the biggest since 2008, when prices fell 51 per cent in response to a demand slump after the financial crisis. Prices then were eventually propped up by OPEC’s last formal decision to cut production.
In contrast, OPEC this year at a November 27 meeting decided against a cutback to defend its market share against shale oil and other competing supply sources despite its own forecasts of a growing surplus in 2015.
Source : SunOnline