Africa-Press – Namibia. Josef Sheehama
THE MINISTRY OF Mines and Energy announced decreases across the board on fuel prices from last Wednesday, paving the way for some relief for consumers.
Josef Sheehama
THE MINISTRY OF Mines and Energy announced decreases across the board on fuel prices from last Wednesday, paving the way for some relief for consumers.
This marks the first month of decreases, following several increases experienced this year. Prices have been reduced by N$1,20 for petrol and 65 cents for diesel.
The reduction has been made possible due to good economic policies pursued.
Fuel pump prices have an effect on the cost of living, as fuel drives the prosperity of the economy for any nation and should therefore be readily available, and at affordable prices.
With the Russia-Ukraine conflict continuing to impact the price of crude oil globally, this has had a direct impact on fuel prices in Namibia.
Even if the government reduces the price of petrol, the economy will not simply recover. In only two to three months petrol prices will rise more drastically than they have been reduced by.
The aim is to reduce fuel pump prices in a bid to reduce the cost of living. Reduced pump prices is good news for end consumers.
This means one can afford buying and using more fuel, and that one has more disposable income after buying fuel.
In all of the above, the ceteris paribus condition has to hold. It’s not only about fuel prices, but also about spare parts among other things.
Even if you reduce fuel prices, it’s only one component of the cost. The other components are still intact, and they are still going up. So, the reduction in the fuel price alone is not enough to compensate for the other costs.
That’s why food prices will not fall, transportation costs will not drop, and the overall effect is that food prices will go up.
The poor and vulnerable will bear the brutal brunt of this.
As we come to accept that our world has changed, probably permanently, we’re forced to face the fact that we can no longer count on the future looking like we expect it to.
In fact, we have no idea what the near future is going to look like.
Of course we must do what we can to figure out how to navigate the known changes. Living in an uncertain world is going to take a certain amount of letting go.
Living in the present, knowing you’ve done everything you can to adapt and prepare, will help you feel more confident in the knowledge that no matter what happens, you will find your way through it.
Namibia has no crude oil reserves of its own, and about 79 shipments are imported.
Petrol and diesel are the major liquid fuels used in Namibia. The government regulates wholesale margins and controls the retail price of petrol.
Namibian petroleum prices are regulated based on import parity price formulas. This means the domestic price is influenced by supply and demand for petroleum products in international markets, combined with the NAD/US dollar exchange rate.
The Organisation of the Petroleum Exporting Countries (Opec) and Opec+ cut production slightly on 5 September – a surprise to international energy communities which had anticipated the group would maintain its current production levels.
Namibia is not excluded in this shocking production cut by Opec.
According to various sources the two energy alliances chose to reduce production by 100 000 barrels per day in October.
Opec+ in a statement says its decision to reverse its strategy and head back to August levels of production was because the change has been intended only for September.
The cutback came as a surprise for many traders, who had expected the Opec countries and its partners to hold production steady as oil prices above US$90 a barrel are squeezing consumers.
The market also looks set to get even tighter in the coming months as the European Union imposes sanctions on Russian exports.
Shortages in production as well as in refining capacity, have left Opec producers with little to do to maintain oil price levels.
Therefore, the decision of Opec+ will affect countries, including Namibia, which are already affected by economic crisis.
This change is a fact of life for drivers all around the world.
When consumer demand for a commodity rises, the supplier will meet that demand at a higher price. Supply and demand are going to continue playing a role in the price of oil .This supply and demand is part of the world of the fuel retailer and wholesaler.
Therefore, demand will exceed supply, which will aid the Ministry of Mines and Energy to increase the prices of oil and gas.
The Russia-Ukraine geopolitical tensions are now threatening to further disrupt energy supplies, with the potential to push price increases higher and shift monetary and fiscal policy.
The Bank of Namibia will take a pro-cyclical stance and hike interest rates by 100 basis points before the end of 2022.
Geopolitical tensions are also threatening to drive up energy prices and drag headline inflation.
High energy prices and limited supply will make our economy especially vulnerable to any additional energy shocks, exacerbating the repercussions of current geopolitical tensions.
To that end sanctions on Russia will shake the world economy for years.
We are now facing an environment of significantly higher commodity prices, which could persist for longer than many would anticipate.
It will raise inflation and reduce economic growth, posing an extremely challenging problem for policymakers.
* Josef Sheehama is a banking industry professional with 19 years of experience. He writes in his personal capacity.
This marks the first month of decreases, following several increases experienced this year. Prices have been reduced by N$1,20 for petrol and 65 cents for diesel.
The reduction has been made possible due to good economic policies pursued.
Fuel pump prices have an effect on the cost of living, as fuel drives the prosperity of the economy for any nation and should therefore be readily available, and at affordable prices.
With the Russia-Ukraine conflict continuing to impact the price of crude oil globally, this has had a direct impact on fuel prices in Namibia.
Even if the government reduces the price of petrol, the economy will not simply recover. In only two to three months petrol prices will rise more drastically than they have been reduced by.
The aim is to reduce fuel pump prices in a bid to reduce the cost of living. Reduced pump prices is good news for end consumers.
This means one can afford buying and using more fuel, and that one has more disposable income after buying fuel.
In all of the above, the ceteris paribus condition has to hold. It’s not only about fuel prices, but also about spare parts among other things.
Even if you reduce fuel prices, it’s only one component of the cost. The other components are still intact, and they are still going up. So, the reduction in the fuel price alone is not enough to compensate for the other costs.
That’s why food prices will not fall, transportation costs will not drop, and the overall effect is that food prices will go up.
The poor and vulnerable will bear the brutal brunt of this.
As we come to accept that our world has changed, probably permanently, we’re forced to face the fact that we can no longer count on the future looking like we expect it to.
In fact, we have no idea what the near future is going to look like.
Of course we must do what we can to figure out how to navigate the known changes. Living in an uncertain world is going to take a certain amount of letting go.
Living in the present, knowing you’ve done everything you can to adapt and prepare, will help you feel more confident in the knowledge that no matter what happens, you will find your way through it.
Namibia has no crude oil reserves of its own, and about 79 shipments are imported.
Petrol and diesel are the major liquid fuels used in Namibia. The government regulates wholesale margins and controls the retail price of petrol.
Namibian petroleum prices are regulated based on import parity price formulas. This means the domestic price is influenced by supply and demand for petroleum products in international markets, combined with the NAD/US dollar exchange rate.
The Organisation of the Petroleum Exporting Countries (Opec) and Opec+ cut production slightly on 5 September – a surprise to international energy communities which had anticipated the group would maintain its current production levels.
Namibia is not excluded in this shocking production cut by Opec.
According to various sources the two energy alliances chose to reduce production by 100 000 barrels per day in October.
Opec+ in a statement says its decision to reverse its strategy and head back to August levels of production was because the change has been intended only for September.
The cutback came as a surprise for many traders, who had expected the Opec countries and its partners to hold production steady as oil prices above US$90 a barrel are squeezing consumers.
The market also looks set to get even tighter in the coming months as the European Union imposes sanctions on Russian exports.
Shortages in production as well as in refining capacity, have left Opec producers with little to do to maintain oil price levels.
Therefore, the decision of Opec+ will affect countries, including Namibia, which are already affected by economic crisis.
This change is a fact of life for drivers all around the world.
When consumer demand for a commodity rises, the supplier will meet that demand at a higher price. Supply and demand are going to continue playing a role in the price of oil .This supply and demand is part of the world of the fuel retailer and wholesaler.
Therefore, demand will exceed supply, which will aid the Ministry of Mines and Energy to increase the prices of oil and gas.
The Russia-Ukraine geopolitical tensions are now threatening to further disrupt energy supplies, with the potential to push price increases higher and shift monetary and fiscal policy.
The Bank of Namibia will take a pro-cyclical stance and hike interest rates by 100 basis points before the end of 2022.
Geopolitical tensions are also threatening to drive up energy prices and drag headline inflation.
High energy prices and limited supply will make our economy especially vulnerable to any additional energy shocks, exacerbating the repercussions of current geopolitical tensions.
To that end sanctions on Russia will shake the world economy for years.
We are now facing an environment of significantly higher commodity prices, which could persist for longer than many would anticipate.
It will raise inflation and reduce economic growth, posing an extremely challenging problem for policymakers.
* Josef Sheehama is a banking industry professional with 19 years of experience. He writes in his personal capacity.
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