KEY POINTS

• FCCPC says falling international crude prices should translate into lower petrol costs for consumers.
• Petrol currently sells for between ₦1,405 and ₦1,420 per litre in Abuja and ₦1,325 and ₦1,370 in Lagos.
• The commission says it will act against anti competitive practices that prevent consumers from benefiting from lower costs.

MAIN STORY

The Federal Competition and Consumer Protection Commission (FCCPC) has called on petroleum refiners and marketers to reflect falling international crude oil prices in their wholesale and retail prices without undue delay.

The commission’s Executive Vice Chairman, Mr Tunji Bello, said on Tuesday in Abuja that it was monitoring developments in the international oil market to determine whether lower crude prices were translating into reduced costs for consumers.

Bello said the monitoring followed public complaints and enquiries about the continued high cost of petrol despite the recent decline in crude oil prices.

He said Brent crude futures, which had risen to about $115 per barrel in September, had fallen below $90 this week.

However, petrol prices remained between ₦1,405 and ₦1,420 per litre in Abuja and between ₦1,325 and ₦1,370 in Lagos.

Bello compared the current prices with those recorded on February 27, a day before the war involving the United States, Israel and Iran began. Brent crude futures closed at $72.48 per barrel on that date, while petrol sold for between ₦839 and ₦925 per litre in Lagos and Abuja.

He said petroleum marketers had attributed the sharp increase in fuel prices over the past eight months to volatility in international crude prices following the conflict in the Middle East.

But Bello argued that a sustained decline in crude prices should provide room for lower petrol and diesel costs.

THE ISSUES

The FCCPC’s position raises a question for Nigerian consumers: how quickly should a fall in international crude prices translate into cheaper petrol?

Crude oil is a major input in petrol production, but the price of petrol at filling stations does not move automatically with the international crude benchmark. Refining costs, transportation, exchange rates, operating expenses and the cost of existing inventories can also influence what marketers charge.

This means a fall in crude prices may not produce an immediate reduction at the pump. However, if lower crude costs are sustained and the cost of supplying petrol also declines, consumers would reasonably expect to see some relief.

The comparison between February and the current period also shows how sharply fuel prices have changed. Petrol prices in Abuja and Lagos have risen considerably since February, even as the international crude market has moved through periods of volatility.

For households and businesses, the concern is not limited to the price displayed at filling stations. Expensive fuel raises transportation and operating costs, which can feed into the prices of goods and services.

WHAT’S BEING SAID

“If the decline in crude prices is sustained, there is no justification for refiners and marketers to continue to keep petrol and diesel prices relatively high.” – Tunji Bello, Executive Vice Chairman, FCCPC.

“Where there is evidence of anti-competitive conduct or unfair practices that prevent consumers from benefiting from lower costs, we will take appropriate action within our mandate.” – Tunji Bello, Executive Vice Chairman, FCCPC.

WHAT’S NEXT

The FCCPC said it would continue working with the Nigerian Midstream and Downstream Petroleum Regulatory Authority and other relevant government agencies to monitor wholesale and retail petrol prices.

The commission also said it would investigate evidence of anti competitive conduct or unfair practices that prevent consumers from benefiting from lower supply costs.

BOTTOM LINE

The FCCPC wants lower international crude prices to translate into cheaper petrol and diesel for Nigerians. Whether consumers see that relief will depend on how wholesale supply costs change and how refiners and marketers respond.