Anxiety mounts in Tanzania as global oil prices soar

Dar es Salaam. Cautions are emerging over possible increase in transportation cost as prices of petroleum products are soaring following changes in the world market.

Petrol price reached Sh2409 per litre on Wednesday – the highest ever in Dar es Salaam – and the possibility is that the prices will continue to rocket.

Tanzania’s Energy and Water Utilities Regulatory Authority (Ewura), which regulates the importation of oil, said the increases in the local prices in July are due to consecutive increases in world oil market prices in April and May.

“We have a meeting of the executive committee on July 14 and increase in oil prices is one of our top agenda. We will discuss and come up with a common decision on the matter,” said Mr Mustafa Mwalongo, information officer with Tanzania Bus Owners Association (Taboa).

The meeting will also come up with proposals for new bus fares to reflect the increase in prices of oil, spare parts and other costs the transporters incur.

“We haven’t come across such kind of challenge since the fifth phase government came into power and therefore we will chart best ways to approach the issue,” he said by phone.

Manufacturers think they will not see an immediate effect in industrial production but fear that transportation cost would rise. “Much of the industries are using electricity, natural gas and coal and very few which use furnace oil. Therefore there is no immediate impact in production. However, transport cost which is likely yo increase will also have impact on prices of manufacturing products,” said Mr Akida Mnyenyelwa, acting director of policy and advocacy at the Confederation of Tanzania Industries (CTI).

Oil prices hit a multi-year high on Monday of $78.8 a barrel but an American multinational investment bank and financial services company Morgan Stanley expects international prices to hit $85 a barrel in the second half of 2018.

President Donald Trump demanded Organization of the Petroleum Exporting Countries (OPEC) to cut crude prices “now” only days after the United States and Saudi Arabia discussed the possibility of the kingdom releasing more of its own crude to dampen surging prices.

“The OPEC monopoly must remember that gas prices are up and they are doing little to help. If anything, they are driving prices higher as the United States defends many of their members for very little $’s. This must be a two way street. Reduce pricing now!” wrote Mr Trump in his twitter account on Wednesday.

Iran’s OPEC governor Hossein Kazempour Ardebili said tweets by Mr Trump in the White House are backfiring, by sending prices higher, and undermining US allies.

“Your tweets have driven the prices up by at least $10 per barrel,” Kazempour said in a message carried by Iranian Oil Ministry’s Shana news service, spicing the analysis with: “Pls stop it, otherwise it will go even higher!”