Gov’t Slow to Adjust National Oil Prices as Global Prices Decline
Your editorial headlined, “The Administration Ought to Walk Its Talk” [Volume 14, Number 758, November 9, 2014] attempts to analyse an important issue which, unfortunately, is long overdue. The price of oil has been falling at a steady rate since June 2014. By most estimates, the price of oil, at an international level, has fallen by a little over 25pc. This, for some unknown reason, has not been reflected locally. The government has been timely in raising the price of oil whenever world prices go up. Unfortunately, the efficiency of the government agency responsible for setting national oil prices ’s seems to have evaporated when it comes to lowering national oil prices to match the global market. This is where your editorial should have focused and, if possible, tried to uncover why corrective measures were not taken in time to reflect world conditions.
Since June, 2014, world oil prices have fallen by a little over 25pc, and Ethiopians only get a belated adjustment of less than one per cent four months later.
I am not so sure whether the “private sector” would have done any better. Experiences of “private sector” business practices in this country have not been exemplary, in terms of transparency and fairness. No matter what happens at the international market, the “private sector” just raises prices.
Let us focus on why the government did not make the necessary price adjustments, as it seemed capable of doing this efficiently when world prices were increasing. Takeover by the “private sector” can come at some later stages when these guys are eager to follow market forces and their associations have become strong enough to take corrective measures.