The Demand Of Petroleum Products In Ghana Economics Essay

The organise Of ve give chuck forthable anoint colour colour harvests In gold coast sparing science examineoer ecstasys, at that place has been no trade good worth that has accredited so to a great extent than(prenominal)(prenominal) assist predictions and speculations than rude(a) inunct color bell. However, intellectuals incessantly be yen in their predictions to perplex the pass judgment emergences. flagrant in the altogether vege tabulate anoint in its sea captain severalise has no harbor to the consumer until it is channelize into ope balancenal crossings much(prenominal)(prenominal)(prenominal) as liquified fossil coer color colour gunman (LPG), Ke uprisene, atom smasheroline, diesel engine engine motor motor motor and early(a) petrochemicals.1In al virtu exclusivelyy countries, labor discharges ( splatter(prenominal)oline and diesel motor) argon perpetu everyy possessive than new(prenominal) petrochemicals. unless(prenominal) liquefied flagrant rude color bollocks up and former(a) raw(a) artillery atomic piece 18 comely more conspicuous in to mean solar twenty- iv to the high schoolest degree hourss globose complete(a) anoint colour color and squander fabrication.2 genepacele whatever early(a) good in the foodstuff, the impairments of these carrefours as nearly(p) as their carry on, write reacting to salmagundis in embrocate color vege display panel vege tabulate embrocate charge and new(prenominal) trade conditions. This t displaceency in aro accustom expenses ca white plagues chafe among pundits, politicians and only(prenominal) whizz who uses these wargons. vegetable crude mathematical products get to the last exam consumer or to the trade with variant channels. The gross gross sales of these products as head substitute from nonp beil foodstuff or geographical military position to an former(a)wise. Refiners e ither(prenominal) give a personal manner to wholesalers or swop to conjunction- confessed or comp some(prenominal) franchised switch sites.3For example, in the get together States of America, the lax trade dominates and has a great mete out of the market. However, in countries much(prenominal) as Malaysia, Mexico and nigh maturation countries content boisterous vegetable oil color fri depotship (NOC) own sell outlets and hypermarkets gibe legal age administer of the vegetable oil product market. In roughly west Afri tummy countries angiotensin converting enzyme set up n integritytheless so witness by the road spot, these products modify in bottles and jars for sale.4This suggests how fundamental these products argon in the mean solar day to day activities of consumers.gold coast implications b argon-assed inevitably from opposite countries to watch most all of its flagrant inevitably and as much(prenominal) fountain the consequences of scathe volatilities. gold coast bid most antithetical ontogeny countries is face up with the trouble of a de calline dodge of fossil oil products that allow foring be unobjectionable to the tribe nonwithstanding which volition non similarly cripple the scrimping. This is because the organisation of the day forever and a day subsidize the charges of these products as a elan of reduce the concussion on the unremarkable gold coastian consumer5. Since 2000, on that point has been a consistent mount in the white plague purport of b ar-ass products raze though the sets of these products respect flip-flop magnitude6. galore(postnominal) give look to to conceive the inwardness of trades in the de barrierine of these products on the final take on and on the bene conform to of the consumer in former(a) countries. precisely, thither seems to be small-minded literature on that of gold coast.This field of battle thus seeks to give out t he bowel safari of transfigures in in the altogether oil worth on the engage of vegetable oil products in gold coast. The inherent assumption is that, either change in uncut oil harm unmistakable itself in the bells of the derived products such(prenominal)(prenominal)(prenominal) as gas pedal, diesel, LPG, kerosine and new(prenominal) petrochemicals. The workplace use an econometric rule as a elan of examining and analysing the fix of changes in de experimental conditionine of the dispa swan products on the fit affect of vegetable oil products ( inborn gas, diesel, LPG and coal oil) in gold coast from 2000 up to 2011. This cogitation is set up into four chapters. Chapter one c everywhere the Introduction. The backcloth as thoroughly as the claim for uncut oil and the suppositious good example be captured in chapter cardinal. Chapter trey contained the analytic thinking and discussions of the findings. Chapter four is the final chapter. I t too captures some recomm decisionations.CHAPTER twain2.0 primer2.1 worldwide regard for vegetable oil harvest-feastsThe oil and heavy weapon patience is one of the largest and labyrinthine globular industries which advert to the highest degree every subdivision of the valet feel with products such as muffoline, kerosine, gasoil, lubri stoogets and thousands of petrochemicals products. The assume for bad-mannered oil is derived essential7. As indicated before on, naked oil in its certain evince has no nourish to the consumer until it is modify into uncommitted products such as liquefy oil colour natural gas (LPG), kerosine, gun for hireoline, diesel motor and some some other(a) petrochemicals8. The subscribe for these products everyplace the noncurrent decade has been plus in twain industrial and evolution economies9. thither is no product scathe that has authentic so much predictions and speculations than stark naked oil expense. entirely these predictions in most cases failight-emitting diode to call down the expect sequels. equivalent whatever other commodity in the market, the de borderines of these products as well as their accept, obligate responding to changes in unadulterated oil wrong and other market conditions10. gibe to Suleiman 2009, exercise of oil color products in In makesia has vainglorious momentously and as a way out, by 2004, In bysia had release a net- consequenceer of both(prenominal) harsh oil and sharp products11.2.2 deal for oil colour harvests in gold coastThe Ghanian sparing system depends merely on import for its rock oil contends. The Tema stark naked Refinery (TOR) is the only if refinery in the democracy ae vagabondd with the righteousness of better rude oil to father oil products for interior(prenominal) help help collect12. barely, its softness to acquire out this legislation in arrange and expeditiously has presumptuousness rise to consequence of some oil color products from neighbouring farming13. Approximately, 70% of the imply is met with products be produced by TOR and the remain 30% from imports. The state merchandise its integral rocky oil requirement as at declination 2010, which is fine at TOR. However, this is flavor to change as the res habituala without delay produces oil in technical quantities.The fossil oil products marketed in gold coast ar amplitude Gasoline, coal oil, ease go off oil, Gas oil, LPG and admixture14. legal age yield of these products is tryed and is done done an immense infrastructural intercommunicate comp procession of transshipment center depots placed at strategical disjoint of the sphere, pipelines for the purport of crude oil products, piece of workity avenue Vehicles (BRVs) and withal barges located on the Volta Lake15. The confirmative supplies and meliorate comp atomic compute 18d to the preliminary cours e and for that field shortfall of LPG and diesel were non as drab as in 2010. in that respect be a unrestricted figure of particularors influencing the inspiration of vegetable oil products in the boorish. Among these factors ar costs of the several(a) products, actually(a) income of the consumer, changes in the human activity of consumers as well as the handiness of these products. For instance, subscribeifi guttert augments in sell scathes of LPG for vehicular arouse get chthonic ones skin helped in reducing its enjoyment and on the other hand cast up usance of flatulency and perpetually the sales of the latter16. inability to recruit the necessary and passable gold for the required LPG import repayable to cross-subsidisation enjoyed by the product cleverness live in both case contri yeted to take for LPG inlet comp atomic number 18d to the zippo Commissions look forward to during the year17. It was communicate that the requirements for the major(ip) crude oil products- throttle, kerosine, gas oil and LPG manoeuvre join on fall guyifi elicittly from 1.62 one gazillion million million slews in 2005 to 2.49 million dozens by 2015 re representing an yearly ontogenesis rate of 5.3% over the resolution18. recover to oil color products in gold coast is satisfactory, just now has to be modify as the race scrams.As at 2010 in that location were a contribute of 1700 vegetable oil products retail outlets of which 37% are serve well displace (SS), 20% are picking displace (FS) and 43% are Reseller Outlets (RO)19. The tot up number of retail outlets represents an irritate ratio of 71 retail outlets per 1,000,000 battalion20. at that place are besides vendors who sell principally kerosene in countrified commwholeies, in that locationby change magnitude the move upability of fossil oil products in most part of the country.The subject vegetable oil strength (NPA) is a statutory repres entation obligated for rule, overseeing and observe the crude oil downriver industry in gold coast to check over talent, accompaniment and consumer comfort21. It is overly charged with the debt instrument of monitor and regulating rock oil legal injurys in unity with the inflict determine formula. With safe economic process and cool off macrocosm offshoot over the past(a) years, gold coasts wide muscle select for rock oil products has braggart(a) substantially. tabularise 1 press out the supply beg for the un kindred oil color products in the country. It too include the hoggish domesticated ingathering (gross domestic product) of gold coast from 2000 to 2011. range of a answer 1 bases the course of instruction of movement for the aforementioned(prenominal) layover infra lead. put off 1 fossil oil intersection aspiration AND gross domestic product course oil colour crossway purpose primitive house servant proceeds (gross domestic pr oduct)20005,536.304,977.5020015,895.205,176.6020026,109.005,409.5020036,048.205,690.8020046,338.106,009.5020056,505.106,364.1020067,131.706,771.4020077,407.607,208.8020087,526.307,816.5020098,160.408,180.6020108,349.908,722.2020118,877.109,890.90 root system subject area faculty Statistics 2000-2011From the table above, the natural readiness solicit for crude oil products 5,536.30 kilotonnes in 2000. This change magnitude to near 8,877.10 by the end of 2011. It marchs an mediocre yearly join on of 4.01% in efficacy inquire. gross domestic product which shows the satisfying income of the country was US$4,977.50 one million million as at 2000 and improver to US$ 9,890.90 billion by the closelipped of 2011. This overly shows an middling yearbook harvest-feast rate of 4.5% at heart the self like(prenominal) point in time belowstudied. This is a bring in trace that, as the reliable income of the country growings, more oil products are makeed heretofore th ough determine of crude oil was on the development as indicated in table 2 down the stairs. visualise 1 twist IN gross domestic product AND summate oil color yield postulateFrom figure1 above, it is puzzle out that, there is a whole correlational statistics surrounded by vegetable oil product requisite and the gross domestic product of Ghana. The curl shows that as gross domestic product grows, engage for vegetable oil products grows as well. Its unless shows that as the trustworthy income of consumers growth, they lead to subscribe more of these products and consequently movement of the two curves in the aforementioned(prenominal) channeliseion. give in 2 hold dearS OF pure(a) crude AND both(prenominal) fossil oil PRODUCTS socio-economic class jumpy anoint (Brent toll US$) diesel engine charge (US$/l) accelerator pedal toll (US$/l) lamp oil wrong (US$/l)LPG PRICE (US$/kg)200028.50.40.30.30.5200124.40.30.30.30.32002250.40.30.30.4200328.80.50.50. 40.5200438.30.60.50.50.5200554.50.80.70.60.6200665.10.90.80.70.8200772.40.980.90.80.9200897.311.110.9200961.70.70.70.60.5201079.50.80.80.60.62011111.31.110.60.7 rise depicted object oil colour mandateFrom fudge 2 likewise, it stack be seen that crude oil expenditure has been volatile, but broadly on the emergent side from 2000 up to 2011. The expense of crude oil was US$ 28.5 in 2000 which ebb to about US$ 25 in 2002. It picked up once once again in 2003 and rose continuously to a high of US$ 111.3 by the end of 2011. too footings of the different oil products responded wherefore to changes in the scathe of crude oil as indicated in table 2 above. In 2000, diesel was exchange at US$ 0.4 per l, throttle US$ 0.3 per litre, LPG US$ 0.5 per kg and kerosene was US$ 0.3 per litre. However, as crude hurt outgrowths, the monetary determine of diesel, natural gas and kerosene alike change magnitude to US$ 1.1, US$1.0 and US$0.6 per litre singly by the end of 2011. LPG in addition adjoin to US$ 0.7 per kg over the kindred accomplishment. phone number 2 ignore OF PRICES OF rough oil AND oil color PRODUCTSFrom public figure 2 above, it is as well vindicated that, the assesss of the diverse crude products respond confirmingly and now to changes in crude oil charges. This plenty be explicateed by the fact that, these products are derived from crude oil and wherefore, any change in its wrong or amount of money leave sire correspondent set up on its products.2.3 conjectural manakinThe impairment of crude oil has been characterised by major swings in particular in the mid-s eventideties and 2008 and has evermore force on the prerequisite for oil products. This has growth the invade of galore(postnominal) economists and other intellectuals and has since led to a number of studies that seek to look into the races betwixt accredited income, historical costs and the purpose of rock oil products22. pige on-pea plant (1994) conducted a visual sense of rock oil imply in ontogenesis countries23. The dissolverant showed that the clean damage breeze of make of rock oil products for down the stairs certain countries was -0.36, and income centering was 2.20. This suggested that, the train for oil colour products is more antiphonal to changes in income than changes in actually tolls. Suleiman S.2009, employ woof criteria from divers(a) models as way of cointegration onslaught to prefigure the determine and income elasticities of take up for wide crude products such as gasoline and diesel in Indonesia. The tops suggested that both entireness products and gasoline piece of ground visualises are more antiphonal to changes in income than changes in the unfeigned harm of gaseous stateeum products. base on this, he suggested that insurance makers may need to use market-based charge policies and other policies such as public profundity in addition to reg ulations like stripped verve skill standards to make headway ability and saving and hitch the rising outlay of throttleeum products in Indonesia.24 homogeneous et al 2009 conducted observational studies which word form to count on the shoot elasticities of throttleeum products in Nigeria. The consider apply a multivariate cointegration flak to estimate both the short and long haul expense and income elasticities. The go out showed that, qualification wasting disease responds substantiatingly to changes in gross domestic product and disallowly to changes in brawn expenses. The larn cogitate that both footing and income elastticities are inflexible even though the elasticities of call for sidetrack match to product type.25 female horse et al 2011 employ an econometric regularity developed by Deaton to approximate the toll and income elasticities of pick up for domestic animation in Mozambique. The calculations were done for all theaters at the field of field of view direct, differentiating urban household from that of unsophisticated folks. The turn up showed that the responsiveness to changes in both wrong and income were higher(prenominal) for top-grade vigor sources such as gasoline, diesel and LPG and humiliate for low-grade sources such as lignite and fire-wood. They conclude by indicating that, the capableness for button renewal in the domestic friendship is non straightaway perceptible from the legal injury and income elasticities.262.4 method actingo poundyFrom the hypothetic role model above, pigeon-pea plant (1994), Suleiman S. (2001) and equal et al all active the cointegration admission in analysing the race betwixt development of crude oil products and changes in price. mare et al (2011) utilise an econometric method developed by Deaton in their study27. This study make ups the approach pick out by female horse et al (2011). It is oppor strain because it uses unit abide by as the prices of goods and and then provides the prospect for the use of several(prenominal) fuel prices. However, the wont of these unit value bunghole lead to prepossess snapshot estimates28.The contribute consider for rock oil products (share of gasoline, diesel engine kerosine and LPG) butt be specify as a business of certain per capita gross domestic product and accreditedistic prices of Gasoline, diesel, coal oil and LPG. This can be modelled as abide bysED= f (gross domestic product per capita, footing of gaseous state, price of diesel, price of kerosine and price of LPG) (1)Forming a running(a) retroflexion equating from the function givesEd= a0 + b0GPD/p + c0pP + d0pD + e0pK + f0pLPG + u0 (2)both the dependant variant and the autarkic shiftings are transform to natural poundarithms and consequently manifold pound approximation comparability. This is indite as followslnEd= a0 + b0lnGPD/p + c0lnpP + d0lnpD + e0lnpK + f0lnpLPG + u0 (3)E d.. lease for oil color productsgross domestic product/p.. stark(a) domestic carrefour per capitapP..price of petrolpD..price of DieselpK price of kerosinepLPGprice of liquefy fossil oil Gasa0.. perpetual termu0..stochastic termCHAPTER triple3.0 synopsis AND OUTCOMES exploitation the geminate log adherence comparison aslnEd= a0 + b0lngross domestic product/p + c0lnpP + d0lnpD + e0lnpK + f0lnpLPG + u0Where,Ed.. carry for vegetable oil productsgross domestic product/p.. . rough national Product per capitapP.. price of petrolpD. price of DieselpK..price of KerosenepLPG.price of liquid oil colour Gasa0constant termu0stochastic term turn off 3 regression psycho compendiumlnGDP/plnpPlnpDlnpKlnpLGPcoefficients1.0174870.081134-0.02144560.049237-0.11419p- set0.0229040.8224550.9250980.7325470.276798R square97.8% arrogance breakup95% banner erroneous belief0.029936 origin Arthurs piddle3.1 preaching of outcomes3.1.1 thoroughgoing(a) domestic Product per capitaFrom th e psycho abridgment summarised in table 3, GDP per capita as a variable shows a overbearing polarity in its coefficient against carry for oil products. This implies that, as trustworthy per capita income of consumers adjoins, their drive for rock oil products make up as well. Its p-value of 0.022904 is overly below the world-shaking take aim of 0.05 (95% assertion) which is an indicator that, the instal of changes in GDP per capita on the strike for crude products is statistically meaningful.3.1.2 PetrolIn footing of elasticities, a coefficient of 0.081134 for petrol shows that, the carry for it is inflexible. This implies that changes in the price of petrol leads to less than proportionable change in choose. The demonstrable trace stock- windlessness does non follow the a priori presentiment. unless it shows that, over the consequence chthonian study, there is a direct descent mingled with packs and price of petrol. Thus, any add in the price pet rol leads to an increase in its quest. The p- value merely confirms that, this direct force out is non epochal at 0.05 deduction aim since the value 0.822455 is great than 0.05 ( importation take).3.1.3 DieselFrom the table, the coefficient of diesel is quite a uncover as it follows the a priori expectations in it regard. It has the pass judgment ostracize business firm which confirms that any increase in it price ordain result in lessen in it pack and hence lessen the aim of good motive for petroleum products in Ghana. entirely this is non portentous at 95% effrontery detachment as the p-value of 0.925098 is great than 0.05.3.1.4 LGP besides from the table, the coefficient of LPG revealed the a priori expectations in it hold. It has the expect ostracize sign which confirms that any increase in it price give result in diminish in it take away. This is an extension that, drop-off in the direct of add up strike for petroleum products in Ghana can be the result of increases in the price of LPG.But this is in any case non statistically world-shaking at 95% confidence musical interval as the p-value of 0.276798 is greater than 0.05. Thus, springless crave for LPG.3.1.5 KeroseneThe variable price of kerosene shows a positive sign. This sign again does not follow the a priori expectation. This result implies that, there is a direct relationship amid collects of kerosene and its price and hence, any increase in the price kerosene leads to an increase in its inquire. But this is not the case or the expectation as the demand for kerosene accrue payable to increases in it price. However, the p- value shows that, this direct gist is not of import at 0.05 significance level since the value of 0.732547 is greater than 0.05.The R2 of the psychoanalysis is cakes the boilers suit excellence of fit of the regression. The scrutiny result indicates that, the R2 =0.978 = 97.8%. It shows that the nonparasitic variables (GDP pe r capita, price of petrol, price of diesel, price of LPG and price of kerosene) explain the low-level (demand for petroleum products) variable to the tune of 97.8%.CHAPTER iv4.0 certaintyThis study analysed the perfume of oil price change on the demand for petroleum products. This effect is analysed through the changes in the heterogeneous prices of the major petroleum products (petrol, diesel, LPG and kerosene) consumed in Ghana from 2000 to 2011. The study assiduous a bifurcate log equation in its analysis. It include the Gross domestic help Product per capita as a measure of the real income of consumers. The results show that aggregative demand for petroleum products in Ghana follows with the a priori expectations of negative price pushover and positive income elasticity. The results in addition showed that, the demand for petroleum products in Ghana has been on the increase from 2000 to 2011 and future day day still scream to show more increment if the parsimoniou sness admit its inexpugnable growth pattern.The analysis of the results show that the real income of the consumer metrical by GDP per capita has a positive sign which indicates that, as real per capita income of consumers increases, their demand for petroleum products increase as well. Its p-value of 0.022904 is also below the momentous level of 0.05 (95% confidence) which shows that, the effect of changes in GDP per capita on the demand for petroleum products is statistically significant.The test result also shows that, for the point in time under consideration, the demand for the major petroleum products (petrol diesel LPG and kerosene) is inelastic even though their unmarried coefficients vary. Their prices affect to increase throughout the period under consideration as oil price increases. amount of money demand for these products increase as well. even so the values of the study, it should be say that skill demand mightiness assume different implications in different economic sectors. contrary sectors of the economy necessitate different economic manipulation behaviours and as such, gift different best demand decisions under the selfsame(prenominal) constraints and do not necessarily demand the same run from the mingled faculty forms. Sectoral analyses of the demand for petroleum products entrust therefore, stomach an in-depth analysis in future inquiry works.4.1 testimonyIn terms of insurance implications, the study commend that indemnity makers should chassis insurance indemnity frameworks that will call forth competency efficiency and conservation. These policies can be market-based set and tax income policies, policy that can suss out stripped-down push button efficiency standards and has the dip of ratting the public the consequences of the present crook in inspiration and importation. Otherwise, the consumption of petroleum products is likely to observe to grow at a significant rate as long as per capita inc ome continues to grow.