Consumers get festive fuel gift

The Ministry of Mines and Energy yesterday announced that pump prices will drop by 50 cents per litre across the board a minute after midnight on Wednesday morning. The Walvis Bay petrol retail price will be N$11.19 per litre, compared to the current N$11.69. The wholesale price for diesel 500ppm will be N$11.62 over the current N$12.12, while diesel 50ppm will cost N$11.72 compared to the current N$12.22. The early festive gift for consumers is due to current developments in the international oil market, which Minister Isak Katali said was not strictly determined by the economics of a free-market system. “The price is based on how much oil the largest producers put on the market and what price they want to charge, decisions often made by the cliques ruling Middle Eastern nations,” Katali said in a statement explaining the price change yesterday. The Organisation of Petroleum Exporting Countries (OPEC) traditionally hold about 80% of the world’s oil reserves, producing about a third of the world’s oil, Katali explained. As of 2007 however, the US has stepped up its own oil and natural gas production, resulting in more oil on the international market and more competition among producers. “Saudi Arabia, which has traditionally modulated prices by expanding or contracting production, grew frustrated this year with other OPEC countries cheating on their quotas and with the Western Hemisphere’s boost in production,” the minister said, explaining that the country decided to cut prices in hope of retaining market share, rather than cut production to keep prices high. “The economics are becoming clear. The world’s biggest producers will accept lower prices to force out competition, but keep them high enough to continue finding and producing more oil. “Moving into the last quarter of November, expectations of growing US crude supplies sent world prices sliding to a new four-year low, and are turning up the heat on OPEC members to cut production. The market is highly focused on whether members of OPEC will get over their differences and cut production,” Katali said. The new local petrol prices keep Namibia well below the global average of N$14.30 per litre WINDHOEK DENVER ISAACS