Over decennaries, there has been no trade good monetary value that has received so much attending anticipations and guesss than rough oil monetary value. However, intellectuals ever fail in their anticipations to bring forth the expected consequences. Crude oil in its original province has no value to the consumer until it is transformed into functional merchandises such as Liquefied crude oil Gas ( LPG ) , Kerosene, Gasoline, Diesel and other petrochemicals.[ 1 ]In most states, motor fuels ( Gasoline and Diesel ) are ever dominant than other petrochemicals. But Liquefied Petroleum Gas and other natural gas are going more seeable in today ‘s planetary oil and gas industry.[ 2 ]Like any other trade good in the market, the monetary values of these merchandises every bit good as their demand, maintain reacting to alterations in rough oil monetary value and other market conditions. This motion in fuel monetary values causes worry among initiates, politicians and everyone who uses these merchandises. Petroleum merchandises get to the concluding consumer or to the market through different channels. The gross revenues of these merchandises besides vary from one market or geographical location to another. Refiners either sell to jobbers or sell to company-owned or company franchised retail sites.[ 3 ]For illustration, in the United States of America, the unfastened market dominates and has a greater portion of the market. However, in states such as Malaysia, Mexico and most underdeveloped states National Oil Company ( NOC ) ain retail mercantile establishments and hypermarkets control bulk portion of the crude oil merchandise market. In most West African states one can even see by the wayside, these merchandises filled in bottles and jars for sale.[ 4 ]
This shows how of import these merchandises are in the twenty-four hours to twenty-four hours activities of consumers.
Ghana imports crude demands from other states to run into about all of its petroleum demands and as such face the effects of monetary value volatilities. Ghana like most other developing states is faced with the job of a pricing strategy of crude oil merchandises that will be acceptable to the population but which will non besides stultify the economic system. This is because the authorities of the twenty-four hours ever subsidize the monetary values of these merchandises as a manner of cut downing the impact on the ordinary Ghanese consumer[ 5 ]. Since 2000, there has been a consistent rise in the ingestion degree of crude oil merchandises even though the monetary values of these merchandises keep increasing[ 6 ]. Many have tried to analyze the consequence of alterations in the monetary value of these merchandises on the concluding demand and on the public assistance of the consumer in other states. But, there seems to be small literature on that of Ghana.
This survey hence seeks to analyze the consequence of alterations in rough oil monetary value on the demand of crude oil merchandises in Ghana. The implicit in premise is that, any alteration in rough oil monetary value manifest itself in the monetary values of the derived merchandises such as gasoline, Diesel, LPG, kerosine and other petrochemicals. The survey employed an econometric method as a manner of analyzing and analyzing the consequence of alterations in monetary value of the assorted merchandises on the entire demand of crude oil merchandises ( gasoline, Diesel, LPG and Kerosene ) in Ghana from 2000 up to 2011. This survey is organised into four chapters. Chapter one covered the Introduction. The background every bit good as the demand for crude oil and the theoretical model are captured in chapter two. Chapter three contained the analysis and treatments of the findings. Chapter four is the reasoning chapter. It besides captures some recommendations.
2.1 Global Demand for Petroleum Merchandises
The oil and Gas industry is one of the largest and complex planetary industries which touch about every portion of the human life with merchandises such as gasolene, kerosine, gasoil, lubricators and 1000s of petrochemicals merchandises. The demand for rough oil is derived demand[ 7 ]. As indicated earlier on, rough oil in its original province has no value to the consumer until it is transformed into functional merchandises such as Liquefied crude oil Gas ( LPG ) , kerosene, Gasoline, Diesel and other petrochemicals[ 8 ]. The demand for these merchandises over the past decennary has been increasing in both industrial and developing economic systems[ 9 ]. There is no merchandise monetary value that has received so much anticipations and guesss than rough oil monetary value. But these anticipations in most instances failed to bring forth the expected consequences. Like any other trade good in the market, the monetary values of these merchandises every bit good as their demand, maintain reacting to alterations in rough oil monetary value and other market conditions[ 10 ]. Harmonizing to Suleiman 2009, ingestion of crude oil merchandises in Indonesia has grown significantly and as a consequence, by 2004, Indonesia had become a net-importer of both rough oil and refined merchandises[ 11 ].
2.2 Demand for Petroleum Products in Ghana
The Ghanese economic system depends entirely on import for its crude oil demands. The Tema Oil Refinery ( TOR ) is the lone refinery in the state charged with the duty of polishing rough oil to bring forth crude oil merchandises for domestic demand[ 12 ]. But, its inability to transport out this authorization efficaciously and expeditiously has given rise to importing of some crude oil merchandises from neighboring state[ 13 ]. Approximately, 70 % of the demand is met with merchandises are produced by TOR and the staying 30 % from imports. The state imported its full petroleum oil demand as at December 2010, which is refined at TOR. However, this is looking to alter as the state now produces oil in commercial measures.
The crude oil merchandises marketed in Ghana are Premium Gasoline, Kerosene, Residual Fuel oil, Gas oil, LPG and Premix[ 14 ]. Bulk supply of these merchandises is dependable and is done through an extended infrastructural web comprising of storage terminals located at strategic parts of the state, grapevines for the motion of crude oil merchandises, Bulk Road Vehicles ( BRVs ) and besides flatboats located on the Volta Lake[ 15 ]. The existent supplies nevertheless improved compared to the old twelvemonth and for that affair deficit of LPG and Diesel were non every bit serious as in 2010. There are a figure of factors act uponing the ingestion of crude oil merchandises in the state. Among these factors are monetary values of the assorted merchandises, existent income of the consumer, alterations in the figure of consumers every bit good as the handiness of these merchandises. For case, important additions in retail monetary values of LPG for vehicular fuel have helped in cut downing its ingestion and on the other manus increased ingestion of gasolene and constantly the gross revenues of the latter[ 16 ].
Inability to raise the needed and equal financess for the needed LPG import due to cross-subsidisation enjoyed by the merchandise might hold besides contributed to chair LPG ingestion compared to the Energy Commission ‘s prognosis during the twelvemonth[ 17 ]. It was projected that the demands for the major crude oil products-gasoline, kerosine, gas oil and LPG will increase significantly from 1.62 million dozenss in 2005 to 2.49 million dozenss by 2015 stand foring an one-year growing rate of 5.3 % over the period[ 18 ].
Access to crude oil merchandises in Ghana is satisfactory, but has to be improved as the population grows.
As at 2010 there were a sum of 1700 crude oil merchandises retail mercantile establishments of which 37 % are Service Stations ( SS ) , 20 % are Filling Stations ( FS ) and 43 % are Reseller Outlets ( RO )[ 19 ]. The entire figure of retail mercantile establishments represents an entree ratio of 71 retail mercantile establishments per 1,000,000 people[ 20 ]. There are besides sellers who sell chiefly kerosene in rural communities, thereby increasing the handiness of crude oil merchandises in most portion of the state.
The National Petroleum Authority ( NPA ) is a statutory bureau responsible for regulation, supervising and supervising the crude oil downstream industry in Ghana to guarantee efficiency, growing and consumer satisfaction[ 21 ]. It is besides charged with the duty of monitoring and modulating crude oil monetary values in conformity with the prescribed pricing expression. With strong economic growing and steady population growing over the past old ages, Ghana ‘s entire energy demand for crude oil merchandises has grown well. Table 1 show the entire demand for the assorted crude oil merchandises in the state. It besides included the Gross Domestic Product ( GDP ) of Ghana from 2000 to 2011. Figure 1 shows the tendency of motion for the same period under survey.
Table 1: PETROLEUM PRODUCT CONSUMPTION AND GDP
PETROLEUM PRODUCT CONSUMPTION
GROSS DOMESTIC PRODUCT ( GDP )
Beginning: National Energy Statistics 2000-2011
From the tabular array above, the entire energy demand for crude oil merchandises 5,536.30 kilotonnes in 2000. This increased to about 8,877.10 by the terminal of 2011. It shows an mean one-year addition of 4.01 % in energy demand. GDP which shows the existent income of the state was US $ 4,977.50 billion as at 2000 and increased to US $ 9,890.90 billion by the stopping point of 2011. This besides shows an mean one-year growing rate of 4.5 % within the same period understudied. This is a clear indicant that, as the existent income of the state increases, more crude oil merchandises are demanded even though monetary value of rough oil was on the addition as indicated in table 2 below.
FIGURE 1: Tendency IN GDP AND TOTAL PETROLEUM PRODUCT DEMAND
From figure1 above, it is clear that, there is a strong correlativity between crude oil merchandise demand and the GDP of Ghana. The tendency shows that as GDP grows, demand for crude oil merchandises grows every bit good. Its farther shows that as the existent income of consumers increase, they tend to demand more of these merchandises and hence motion of the two curves in the same way.
Table 2: Monetary value OF CRUDE OIL AND SOME PETROLEUM PRODUCTS
CRUDE OIL ( Brent monetary value US $ )
DIESEL PRICE ( US $ /l )
PETROL PRICE ( US $ /l )
KEROSENE PRICE ( US $ /l )
LPG PRICE ( US $ /kg )
Beginning: National Petroleum Authority
From Table 2 besides, it can be seen that rough oil monetary value has been volatile, but by and large on the lifting side from 2000 up to 2011. The monetary value of rough oil was US $ 28.5 in 2000 which lessening to about US $ 25 in 2002. It picked up once more in 2003 and rose continuously to a high of US $ 111.3 by the terminal of 2011. Besides monetary values of the assorted crude oil merchandises responded consequently to alterations in the monetary value of rough oil as indicated in table 2 above. In 2000, Diesel was sold at US $ 0.4 per liter, petrol US $ 0.3 per liter, LPG US $ 0.5 per kilogram and kerosine was US $ 0.3 per liter. However, as rough monetary value additions, the monetary values of Diesel, gasoline and kerosine besides increased to US $ 1.1, US $ 1.0 and US $ 0.6 per liter severally by the terminal of 2011. LPG besides increased to US $ 0.7 per kilogram over the same period.
FIGURE 2: Tendency OF PRICES OF CRUDE OIL AND PETROLEUM PRODUCTS
From Figure 2 above, it is besides clear that, the monetary values of the assorted crude oil merchandises respond positively and straight to alterations in petroleum oil monetary values. This can be explained by the fact that, these merchandises are derived from rough oil and hence, any alteration in its monetary value or measure will hold corresponding effects on its merchandises.
2.3 Theoretical model
The monetary value of petroleum oil has been characterised by major swings particularly in the 1970s and 2008 and has ever impacted on the demand for crude oil merchandises. This has increase the involvement of many economic experts and other intellectuals and has since led to a figure of surveies that seek to look into the relationships between existent income, existent monetary values and the ingestion of crude oil merchandises[ 22 ].
Dahl ( 1994 ) conducted a study of crude oil demand in developing states[ 23 ]. The consequence showed that the mean monetary value snap of demand of crude oil merchandises for developing states was -0.36, and income snap was 2.20. This suggested that, the demand for crude oil merchandises is more antiphonal to alterations in income than alterations in existent monetary values. Suleiman S.2009, used choice standards from assorted theoretical accounts as manner of cointegration attack to gauge the monetary value and income snaps of demand for entire crude oil merchandises such as gasolene and Diesel in Indonesia. The consequences suggested that both entire merchandises and gasolene portion estimations are more antiphonal to alterations in income than alterations in the existent monetary value of crude oil merchandises. Based on this, he suggested that “ policy shapers may necessitate to utilize market-based pricing policies and other policies such as public enlightenment in add-on to ordinances like minimal energy efficiency criterions to advance efficiency and preservation and kerb the lifting ingestion of crude oil merchandises in Indonesia ” .[ 24 ]
Akin et al 2009 conducted empirical surveies which sort to gauge the demand snaps of crude oil merchandises in Nigeria. The survey employed a multivariate cointegration attack to gauge both the short-term and long-term monetary value and income snaps. The consequence showed that, energy ingestion responds positively to alterations in GDP and negatively to alterations in energy monetary values. The survey concluded that both monetary value and income elastticities are inelastic even though the snaps of demand vary harmonizing to merchandise type.[ 25 ]
Maria et al 2011 employed an econometric method developed by Deaton to cipher the monetary value and income snaps of demand for domestic energy in Mozambique. The computations were done for all families at the national degree, distinguishing urban family from that of rural folks. The consequence showed that the reactivity to alterations in both monetary value and income were higher for top-quality energy beginnings such as gasolene, Diesel and LPG and lower for low-grade beginnings such as wood coal and fire-wood. They concluded by bespeaking that, “ the potency for energy passage in the domestic context is non straight seeable from the monetary value and income snaps ” .[ 26 ]
From the theoretical model above, Dahl ( 1994 ) , Suleiman S. ( 2001 ) and Akin et al all employed the cointegration attack in analyzing the relationship between demand of crude oil merchandises and alterations in monetary value. Maria et Al ( 2011 ) applied an econometric method developed by Deaton in their survey[ 27 ]. This survey follows the attack adopted by Maria et Al ( 2011 ) . It is advantageous because it uses unit values as the monetary values of goods and hence provides the chance for the usage of single fuel monetary values. However, the use of these unit values can take to colored snap estimations[ 28 ].
The entire demand for crude oil merchandises ( portion of gasolene, Diesel Kerosene and LPG ) can be specified as a map of existent per capita GDP and existent monetary values of Gasoline, Diesel, Kerosene and LPG. This can be modelled as follows:
ED= degree Fahrenheit ( GDP per capita, Price of Petrol, monetary value of Diesel, monetary value of Kerosene and monetary value of LPG ) aˆ¦aˆ¦aˆ¦aˆ¦aˆ¦aˆ¦aˆ¦aˆ¦aˆ¦aˆ¦aˆ¦aˆ¦aˆ¦aˆ¦aˆ¦aˆ¦aˆ¦aˆ¦ ( 1 )
Forming a additive arrested development equation from the map gives ;
Ed= a0 + b0GPD/p + c0pP + d0pD + e0pK + f0pLPG + u0aˆ¦aˆ¦aˆ¦aˆ¦aˆ¦aˆ¦aˆ¦ ( 2 )
Both the dependant variable and the independent variables are transformed to natural logarithms and hence dual log appraisal equation. This is written as follows
lnEd= a0 + b0lnGPD/p + c0lnpP + d0lnpD + e0lnpK + f0lnpLPG + u0aˆ¦aˆ¦aˆ¦aˆ¦aˆ¦aˆ¦aˆ¦ ( 3 )
Edaˆ¦aˆ¦.. Demand for crude oil merchandises
GDP/paˆ¦aˆ¦.. Gross Domestic Product per capita
pPaˆ¦aˆ¦aˆ¦aˆ¦..price of gasoline
pDaˆ¦aˆ¦aˆ¦aˆ¦..price of Diesel
pKaˆ¦aˆ¦aˆ¦aˆ¦aˆ¦ monetary value of Kerosene
pLPGaˆ¦aˆ¦aˆ¦aˆ¦price of Liquefied Petroleum Gas
3.0 ANALYSIS AND OUTCOMES
Using the dual log appraisal equation as ;
lnEd= a0 + b0lnGDP/p + c0lnpP + d0lnpD + e0lnpK + f0lnpLPG + u0aˆ¦aˆ¦aˆ¦aˆ¦aˆ¦aˆ¦aˆ¦
Edaˆ¦aˆ¦aˆ¦aˆ¦.. Demand for crude oil merchandises
GDP/paˆ¦aˆ¦.. .Gross Domestic Product per capita
pPaˆ¦aˆ¦aˆ¦aˆ¦.. monetary value of gasoline
pDaˆ¦aˆ¦aˆ¦aˆ¦ . monetary value of Diesel
pKaˆ¦aˆ¦aˆ¦aˆ¦..price of Kerosene
pLPGaˆ¦aˆ¦aˆ¦.price of Liquefied Petroleum Gas
Table 3: Arrested development Analysis
Beginning: Arthur ‘s concept
3.1 Discussion of results
3.1.1 Gross Domestic Product per capita
From the analysis summarised in table 3, GDP per capita as a variable shows a positive mark in its coefficient against demand for crude oil merchandises. This implies that, as existent per capita income of consumers ‘ additions, their demand for crude oil merchandises addition every bit good. Its p-value of 0.022904 is besides below the important degree of 0.05 ( 95 % assurance ) which is an indicant that, the consequence of alterations in GDP per capita on the demand for crude oil merchandises is statistically important.
In footings of snaps, a coefficient of 0.081134 for gasoline shows that, the demand for it is inelastic. This implies that alterations in the monetary value of gasoline leads to less than proportionate alteration in demand. The positive mark nevertheless does non follow the a priori outlook. But it shows that, over the period under survey, there is a direct relationship between demands and monetary value of gasoline. Therefore, any addition in the monetary value gasoline leads to an addition in its demand. The p- value nevertheless confirms that, this direct consequence is non important at 0.05 significance degree since the value 0.822455 is greater than 0.05 ( significance degree ) .
From the tabular array, the coefficient of Diesel is rather telling as it follows the a priori outlooks in it demand. It has the expected negative mark which confirms that any addition in it monetary value will ensue in lessening in it demand and therefore diminishing the degree of entire demand for crude oil merchandises in Ghana. But this is non important at 95 % assurance interval as the p-value of 0.925098 is greater than 0.05.
Besides from the tabular array, the coefficient of LPG revealed the a priori outlooks in it demand. It has the expected negative mark which confirms that any addition in it monetary value will ensue in lessening in it demand. This is an indicant that, lessening in the degree of entire demand for crude oil merchandises in Ghana can be the consequence of additions in the monetary value of LPG.
But this is besides non statistically important at 95 % assurance interval as the p-value of 0.276798 is greater than 0.05. Therefore, inelastic demand for LPG.
The variable monetary value of kerosine shows a positive mark. This mark once more does non follow the a priori outlook. This consequence implies that, there is a direct relationship between demands of kerosine and its monetary value and hence, any addition in the monetary value kerosine leads to an addition in its demand. But this is non the instance or the outlook as the demand for kerosene lessening due to additions in it monetary value. However, the p- value shows that, this direct consequence is non important at 0.05 significance degree since the value of 0.732547 is greater than 0.05.
The R2 of the analysis is measures the overall goodness of tantrum of the arrested development. The trial consequence indicates that, the R2 =0.978 = 97.8 % . It shows that the independent variables ( GDP per capita, monetary value of gasoline, monetary value of Diesel, monetary value of LPG and monetary value of kerosine ) explain the dependant ( demand for crude oil merchandises ) variable to the melody of 97.8 % .
This survey analysed the consequence of oil monetary value alteration on the demand for crude oil merchandises. This consequence is analysed through the alterations in the assorted monetary values of the major crude oil merchandises ( gasoline, Diesel, LPG and kerosene ) consumed in Ghana from 2000 to 2011. The survey employed a dual log equation in its analysis. It included the Gross Domestic Product per capita as a step of the existent income of consumers. The consequences show that aggregative demand for crude oil merchandises in Ghana follows with the a priori outlooks of negative monetary value snap and positive income snap. The consequences besides showed that, the demand for crude oil merchandises in Ghana has been on the addition from 2000 to 2011 and future still promise to demo more increment if the economic system maintain its strong growing form.
The analysis of the consequences show that the existent income of the consumer measured by GDP per capita has a positive mark which indicates that, as existent per capita income of consumers ‘ additions, their demand for crude oil merchandises addition every bit good. Its p-value of 0.022904 is besides below the important degree of 0.05 ( 95 % assurance ) which shows that, the consequence of alterations in GDP per capita on the demand for crude oil merchandises is statistically important.
The trial consequence besides shows that, for the period under consideration, the demand for the major crude oil merchandises ( petrol Diesel LPG and kerosine ) is inelastic even though their single coefficients vary. Their monetary values continue to increase throughout the period under consideration as oil monetary value additions. Entire demand for these merchandises addition every bit good.
Notwithstanding the values of the survey, it should be noted that energy demand might presume different deductions in different economic sectors. Different sectors of the economic system have different ingestion behaviors and as such, have different optimum demand determinations under the same restraints and do non needfully demand the same services from the assorted energy signifiers. Sectoral analyses of the demand for crude oil merchandises will therefore, offer an in-depth analysis in future research plants.
In footings of policy deductions, the survey recommend that policy shapers should plan policy models that will advance energy efficiency and preservation. These policies can be market-based pricing and revenue enhancement policies, policy that can guarantee minimal energy efficiency criterions and has the inclination of informing the populace the effects of the present tendency in ingestion and importing. Otherwise, the ingestion of crude oil merchandises is likely to go on to turn at a important rate every bit long as per capita income continues to turn.