NEWS > Commentaries Bring Petrol Price Down Now in Sierra Leone! Posted by on Nov 18, 2008, 21:58

As the price of crude oil continues to plummet in the international market, making mince meat of the Shylocky greed of those oil producing countries that caused the initial hike, the big question here is why are fuel prices in Sierra Leone still so high?

The barrel price of crude oil in the international market is now down to US$ 56 (fifty-six US dollars) dropping from US$ 67 (sixty-seven US dollar) within just a week.  When one peruses how the all time high of crude oil nose-dived from US$149 to figures hovering around 74 US dollars for a barrel, all within a two-month period, one sees how the earlier gloom projections of analysts simply fell apart at the seams.

And from the look of things the prices will still fall despite frantic efforts by the ever rapacious OPEC (Organization of Petroleum Exporting Countries) members to curtail production by at least 1.5 million barrel of crude a day in a bid to stem the drop.  Most OPEC member countries are weeping as their dreams of robbing the world with ever rising prices dissipated almost overnight.

The causes: It’s all linked up with the collapse of the global financial markets with the looming ogre of recession hitting huge economies from the United States to Germany and now even Japan.  For the Japanese, recession was only officially admitted this week.  Demand for oil has dropped so sharply everywhere with even the biggest buyer of late, China holding her reins as she too is faced with a sag in the phenomenal double digit growth rate that she has enjoyed for more than seven years.

Now, back to the crying question: ‘Why are fuel prices still so high in this country?’ Earlier this year the Sierra Leone government yielded to pressure from the oil companies plying this country and announced price increases for petrol and petroleum products.  Grumblingly drivers began to pay Le 16,500 for a gallon of refined petrol, up from the previous price of Le 12,800.  Diesel and kerosene also went up to Le 16,500.

Not unexpectedly, everything also went up.  Trust the Sierra Leonean exploiters who control wholesale and retail business to cash in on any gambit.  They never wait for official notice.  As soon as petroleum prices went up, practically every shop owner, kiosk cleaner, ground spreader and the like went on a grabbing spree, raising prices of their commodities at will.

Smackingly, they told you to either “take it or leave it”. 

Those with slightly better accommodating attitudes told you with tongues in the checks that it was all due to the rise in cost of transportation.  Taxi cabs of course had immediately pushed their fares to Le 1,000 ‘pole to pole’ which could mean anything from forcing you to pay Le 3,000 from Calaba Town to PZ or Le 2,000 from Aberdeen Road Filing station to PZ.  Their pole-to-pole has always been of their own making: a chance to fleece passengers every waking day.

Now to the current reality: With crude down to US$ 74 two weeks ago, less than 50% of the initial US$ 149, give or take the cost of refining, shipping, berthing, excise duties, distribution and other overheads, the price of petrol in Sierra Leone should have gone down to at least Le 11,000 a gallon.  Now with crude down to US$ 56 we should be talking of not more than Le 10,000 a gallon.

One is not ignoring governmental policy of building up funds from petroleum sales for the strategic reserve fund.  If government wants to signal to the local markets that prices of commodities should de-escalate, it should work out things with the oil companies to scale down petrol and petroleum prices immediately.  When this happens, the trader who would now pay considerably less for taxis or poda podas would have little excuse to continue raising prices on goods, particularly home grown foodstuff.

The argument by oil companies that they are still saddled with old stock is pure hogwash.  In this business of oil trading, everyone is a speculator.  Many are just wildcat schemers.  If the spot price had gone up in the international market, you could have bet your lucky stars that the oil companies would have shot up their prices, old stock or not.  The government must act now and deliberate with the oil companies to get fuel prices down commensurate with the international reality.  The Ministry of Trade too must let the public know pronto what the position of things is.  The government has the upper hand now due to the facts on the ground and must act!

The lowering of fuel prices from Le 16,500 to Le 15,000 and then to Le 14,000 is not enough, given the true picture on the international front.