Petroleum marketers have explained why declining global crude oil prices may not immediately translate into cheaper petrol at filling stations, following a call by the Federal Competition and Consumer Protection Commission (FCCPC) for operators to pass cost savings on to consumers.
The commission said on Tuesday that Brent crude prices had fallen from a September peak of $115 per barrel to below $90, urging refiners and marketers to reflect the reduction in petrol and diesel prices without unnecessary delays.
However, the National President of the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), Billy Gillis-Harry, said crude oil prices were only one of several factors determining the cost of petroleum products.
Gillis-Harry explained that pump prices often respond quickly to increases in crude oil prices but decline more slowly because marketers must first sell existing stock purchased at higher prices.
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He added that the depreciation of the naira could also limit the benefits of falling international crude prices, as petroleum imports and refining inputs are largely dollar-denominated.
Similarly, the National Secretary of the Petroleum Dealers Association of Nigeria (PEDAN), Ibrahim Shehu Yahaya, said reductions in crude oil prices take days or weeks to reflect in local petrol prices because of the time required for cargo pricing, refining and depot deliveries.
Yahaya noted that other components of pump prices include refining margins, transportation, handling charges and local taxes.
The marketers maintained that these factors explain why domestic petrol prices do not always move in line with changes in the international crude oil market.
They also called on the FCCPC to engage industry operators to gain a better understanding of pricing dynamics in the downstream petroleum sector.
The FCCPC said it would collaborate with the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to monitor wholesale and retail petroleum prices.
