Thursday, July 7, 2022

Falling fuel prices provide comfort during economic hardships

As workers go to work worrying about losing their jobs, those who still manage to hold on to their vehicles are finding comfort in the retail fuel prices that keep on falling.
For the second consecutive month, there has been a decrease in prices of petroleum products at the pumps including petrol, diesel and paraffin.
Energy authorities in government have been tracking crude oil movements on global markets with the black diamond trading at less than $40 per barrel.
On Friday, it was announced that retail prices for illuminating paraffin, diesel and petrol have been reduced. All these products have gone down by P0.50.

“The price adjustment is caused by the decrease in the crude oil prices between the month of November and December,” said Jacob Thamage, acting Permanent Secretary at the Ministry of Minerals, Energy and Water Resources.
“International crude oil prices averaged $39.95 in December 2008 from an average of $52.45 per barrel in November. Average crude oil prices decreased by 23.83% between the months of November and December 2008.”
The Energy Information Administration (EIA) said last week that the worsening global economy weakened oil demand adding that the outlook for supply and demand fundamentals indicates a fairly loose oil market balance over the next 2 years.  

“The global economic downturn points to declining oil consumption in 2009, while additional production capacity from both OPEC and non-OPEC nations should boost surplus production capacity, reducing the likelihood of a renewed strong upward pressure on prices,” the EIA said in its forecast for 2009 and 2010.
EIA added that the global real GDP growth (weighted according to shares of world oil consumption) is assumed to be 0.6 percent in 2009 and 3.0 percent in 2010. 
Botswana, like the rest of the world, has had a share of the pie on the global downturn with a slump in diamond and base metals sales and reduction in tourism arrivals. Major employers like BCL, African Copper, and Debswana have been forced to lay off workers or send employees on leave.

BCL has retrenched 388 miners, African Copper has mothballed in Mowana mine and Debswana has shut operations and sent workers on leave.

The reduction in fuel prices is good news for motorists, companies and commuters as transport costs will be reduced.

Equally, the fall in energy prices will impact positively on inflation, which this month fell by 1.3% from 15.0% in November to 13.7% in December.

The Central Statistics Office (CSO) said on its monthly CPI update that the transport group index went down by 6.2% from 121.4 to 113.8 between the months of November and December.

The decline was largely due to the decrease in the constituent section index of Operation of Personal Transport, which went down by 11. 1% from 118.9 in November to 105.7 in December.

The previous fuel prices reductions was done in December 12, 2008 when prices for all the petroleum products went down by P1.00 per liter.


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