The government takes advantage of the windfall of soaring oil prices


The government expects a boon in oil exports after crude oil shortages by major exporters around the world have pushed commodity prices to a three-year high.

Crude oil prices peaked at $ 85 per barrel this week as demand for the commodity increased amid tight supply from China, the United States of America (United States) and the United States of America (United States). Brazil, among others.

The current world market price is now about 55% higher than the government’s benchmark crude oil price, which was set at $ 54.75 per barrel in the 2021 budget.

The budget also set benchmark oil revenue at $ 885.7 million, equivalent to GH ¢ 3.69 billion, for 2021.

Experts say the surge in crude oil prices portended good fortune for the economy. In the short to medium term, this could push oil revenues up to nearly half, which is needed to close the income gap that has engulfed the economy.

It also has the potential to stimulate the growth of the oil sector to increase the fall in production experienced in other sectors of the economy.

The benchmark sales have already exceeded their target by almost a quarter in the first half of the year. Finance Minister Ken Ofori-Atta said in July that oil revenues stood at GH ¢ 1.33 billion in June of this year, more than the period target of 1.1 billion GH ¢.

Production

Data from the Ghana Statistical Service (GSS), however, showed that despite soaring crude oil prices, production was subdued, falling nearly 20 percent in the first six months of the year. .

He said crude oil production rose from 34.23 million barrels in the first half of 2020 to 27.76 million barrels during the same period this year.

The first and second quarters of 2021 saw declines compared to the same periods last year, according to data made available to the Daily Graphic.

This year’s crude oil production target of 64.86 million barrels is also lower than the 66.91 million barrels produced in 2020.

Implications

An economist, Dr Said Boakye, said that while rising crude oil prices were good for the economy, the country’s ability to maximize earnings was tied to the amount of crude oil produced.

He said it was surprising that the higher prices failed to stimulate production to allow the economy to reap the maximum benefits from the price increases.

“It is not good that production in 2021 is lower than in 2020, which was a COVID-19 year. Now is the time for us to recover from the COVID-19 crisis and so you expect production to increase, ”said Dr Boakye, who heads the research directorate at the Institute of Fiscal Studies (IFS).

“Again, the price of oil has increased and this is expected to motivate producers to increase their production but with the current situation it shows that the country is not taking full advantage of the increase in the price of oil. “, he added.

He reiterated his calls on the government to convince oil producers to increase their production in order for the country to take full advantage of the global rise in oil prices.

Going forward, he said it was essential for the state to strive to increase its stake in the oil sector to be able to take full advantage of its prospects.

“Overall, we need to increase our participation. We currently have about 16%. 100 and it is woefully insufficient. If we don’t increase our participation, we will continue to have less influence and commercial producers will continue to make decisions that benefit them, not the nation, ”said Dr Boakye.

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