Analyst Urges Ghana to Strengthen Oil Refining Capacity to Reduce External Shocks

Economic Analyst, Emmanuel Boateng, has called for stronger investment in Ghana’s oil refining capacity to help shield the economy from global shocks that often lead to rising fuel prices and inflation.

Speaking on the Business Breakfast on Zed 101.9FM, Mr. Boateng said although Ghana produces crude oil, the country still depends heavily on imported refined petroleum products, making it vulnerable to fluctuations in global oil prices.

He explained that Ghana exports the crude oil it produces but imports refined fuel products for domestic consumption, a situation that effectively makes the country a net importer of petroleum products.

“Ghana produces oil, but what we do is export the crude and then import refined oil. In the end, what we import is more than what we produce, so we remain net importers,” he said.

Mr. Boateng noted that if Ghana had a strong and efficient refinery capable of processing its crude oil locally, the country could significantly reduce its exposure to global market volatility.

According to him, refining crude oil domestically could also allow the country to export refined petroleum products and earn higher revenue while limiting the inflationary pressures associated with rising global crude oil prices.

“If oil prices rise globally and you are exporting oil, you earn more revenue. At the same time, if you are refining locally, you are not forced to buy refined products from the international market at high prices,” he explained.

The analyst stressed that geopolitical conflicts and global wars often disrupt energy supply chains and push oil prices higher, adding that such developments are likely to continue occurring in the future.

Mr. Boateng therefore questioned what concrete steps Ghana has taken to insulate its economy from such shocks.

He recalled that Ghana discovered commercial quantities of oil in 2007, nearly two decades ago, and argued that the country should have made more progress in strengthening its petroleum value chain.

The analyst also cautioned that Ghana’s sustained disinflation trend could slow down or even reverse if rising geopolitical tensions continue to disrupt global energy markets.

He noted that Ghana has recorded about 14 consecutive months of disinflation, a development that has helped moderate inflationary pressures in the economy.

Mr. Boateng explained that external developments, particularly geopolitical tensions in the Middle East, could significantly influence inflation trends in Ghana.

He pointed to tensions involving Iran, Israel and the United States, noting that conflicts among resource-rich or energy-oriented countries often have far-reaching consequences for global supply chains and energy markets.

According to him, geopolitical conflicts tend to disrupt oil supply routes and push up crude oil prices, which eventually affects the cost of energy and transportation worldwide.