THE POLITICAL ECONOMY OF PETROLEUM PRICING IN GHANA

ABSTRACT This study aimed at examining how political economy factors influence the pricing of petroleum products in Ghana. The research intended to find out the powers and interests of the actors in determining the prices of petroleum products, the processes involved in implementing the prices of fuel and the implications of petroleum price deregulation on the Ghanaian economy. A qualitative approach was used in the data collection, analysis and presentations of which 22 respondents were interviewed. The National Petroleum Authority (NPA) with other actors such as the Ministry of Petroleum (MoP), Tema Oil Refinery (TOR), Bulk Oil Storage and Transportation Company (BOST), Bulk Distribution Oil Companies (BDCs), and Oil Marketing Companies (OMCs) were revealed as the powerful and influential actors in the pricing of fuel in Ghana. Actors influence the pricing of fuel through taxes/levies, policy guidelines, exchange rate and legal actions against the government. The findings of this study also show some power struggles among actors in the pricing of fuel. The Import Parity Method components; the exrefinery price, taxes and distribution margins as well as the platt methods were revealed as the processes and methods involved in determining the prices of petroleum products in Ghana. The study revealed that the petroleum price deregulation policy has positive and negative implications on the Ghanaian economy. Positively, it brings more profit, improves the financial situation of the domestic market and increases the regular supply of petroleum products into the country. Negatively, the deregulation of fuel pricing brings unpredictable prices, and the time for implementing the policy was revealed as unfavorable. It is therefore recommended that government build the capacity of the key players so as to ensure healthy competition and stability in the pricing of petroleum products.