Governor of Lagos State, Babatunde Fashola has questioned the Federal Government’s reluctance to cut pump price of Premium Motor Spirit (Petrol) from N97 per litre following the fall in the global oil price. The Governor said “We should be enjoying cheap fuel if the price of oil has dropped globally. And even as we import the product, a major component has reduced in price. While this has reduced, the pump price of fuel in the country still remains the same. Then something is wrong. If the price increases in the country when the price of oil goes up globally, then it should also reduce when the price of oil drops. “I understand that I am not an economist; they (Federal Government) are the economist. But I have some logic and common sense to ask critical questions. For instance, if one buys flour at N10 per kilogram, and the bread was sold at N1 per loaf, if the price of flour drops, the price of the bread should also change.” He also noted that the Nigerian economy is not doing well and many people have to survive through whatever means. leadership.ng/business/393416/falling-oil-prices-fashola-asks-fg-cut-pump-price ======== What iis the %Change in the Price of the Dollar and what is the %Change in the price of crude oil? My friend this is a very simple economics. At price $100 per barrel, government spends 1trillion on subsidy bills. Naira/Dollar was N165. At price $70 per barrel, government cannot justify spending the same 1 trillion on subsidy bills, despite the devalue of the naira to 178 per dollar. The %Change can never justify it. We have 30% reduction in the price of the crude oil, with a 8% increament in the price of the dollar. The disparity is just glaring. The price of petrol must go down or the appropriation on subsidy must go down should the price of petrol remain constant. Analysis by barcanista@Nairaland
Posted on: Mon, 08 Dec 2014 09:37:37 +0000
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