Tema Oil Refinery explains fuel price increase

The High Street Journal says the Chief Executive of the Tema Oil Refinery (TOR), Mr W.S. Parker, told the paper in an exclusive interview last week that the inability of the populace to understand the intricacies of the petroleum industry leads to public outcry whenever there is an increase in the price of fuel.

According to the paper, Mr Parker explained that there is a formula for at least, establishing the ex-refinery price of petroleum. This includes the cost of the product, which spans the raw material purchases, sales proceeds and operating expenses.

He is quoted as saying that every year the refinery has a budget in which TOR assumes a certain crude oil price. Based on an agreement with the government, any time the price of crude oil goes up by five dollars per tonne or there is an upward change in the exchange rate of the dollar by a certain amount, the price of fuel has to be reviewed.

The High Street Journal reports Mr Parker as saying that contrary to the perception of the public, oil prices have been going up, indicating that in February, this year, the Free On Board (FOB) price of crude oil was $12 per barrel.

This, he said, has risen to $17 per barrel and has dropped slightly of late to between $15 and $16 per barrel. Mr Parker said in the event of the refinery being unable to process crude oil due to breakdowns, finished products are imported, adding that the price of fuel from the refinery is based on what he described as import parity.

This includes payments for FOB prices, freight, letters of credit, inspection, losses and insurance, in addition to wharfage, harbour charges and the use of pipeline.