Price Floors in deregulated fuel market counterproductive — COPEC

The Chamber of Petroleum Consumers (COPEC) has cautioned that setting price floors in a deregulated petroleum market without corresponding ceilings is counterproductive and could create market distortions.

Speaking on Channel One TV’s The Big Issue on Saturday January 24, Executive Secretary of COPEC Duncan Amoah stressed that regulatory intervention in the form of price floors, without balancing measures, undermines market efficiency and limits the ability of oil marketing companies to respond to changing market conditions.

He highlighted that in a properly functioning deregulated system, prices should evolve naturally based on competition, costs, and consumer demand.

“If you talk of a deregulated market, you would expect the market to evolve. Any attempt to intervene by way of setting floors without considering the ceiling, to me, is anarchist. You simply allow others to sell at any rate they want, and in fact, I have used the big three in the past.

There were windows that, and per our checks with average BDC prices, taxes, margins, sometimes their prices were overshot by GHS 0.50 to GHS 1. So if you need to define a floor, define a ceiling also so that they can play within.”

Meanwhile, COPEC has called on the NPA to remove price floors set out in the 2024 petroleum products pricing guidelines.

According to COPEC, the policy, which prevents Petroleum Service Providers (PSPs) from selling below the regulator-set minimum, is outdated and counterproductive in a deregulated downstream petroleum market.

Amoah, in an earlier interview with Citi Business News, said the price floor does not benefit consumers and argued that scrapping it could allow oil marketing companies (OMCs) to reduce fuel prices further when market conditions permit.