The Chairman of the Energy Transition Study Group of Nigerian Gas Association, Olabode Sowunmi has reported that the global surge in petroleum prices is not exclusive to Nigeria but reflects a broader international trend. He said that it is crucial for Nigerians to grasp that crude oil, as a commodity, is subject to the principles of economics, particularly the concept of fungibility, which dictates uniform pricing across the world. This standardization ensures that crude oil prices remain within a specific range globally, and the refining process adheres to similar uniformity.
He stated that when examining petrol prices online, it becomes evident that the cost is relatively consistent worldwide due to this standardization. He reported that when the naira depreciates against the dollar, the uniformity in petrol pricing is disrupted, leading to disparities that necessitate government intervention in the form of subsidies.
He highlighted that the depreciation of the naira underscores the importance of local refineries, which can mitigate the impact of fluctuating exchange rates. He said that the role of subsidies and local refining becomes crucial in maintaining price stability and shielding consumers from the full brunt of global market volatility.
He said in an interview with Arise Tv from 4:55, “There is an increase in petroleum price all over the world, not only in Nigeria. I want Nigerians to understand that crude oil is a commodity, and economics’ basic fundamental definition defines crude oil as fungible and having uniform pricing. This means that crude oil prices all over the world will fall within a certain range, and the same applies to refining, which is basically standardized. If we go online and check the price of petrol, we see that it’s essentially the same all over the world. The day the naira falls against the dollar, the petrol price ceases to be the same, and that’s where the subsidy kicks in, as well as the advantage of local refineries.”….Vîêw – Möre