The geniuses asking the government to use hedging to insure Ghana against high future oil prices are asking for trouble for our country – and the government should ignore their dangerous advice. Perhaps it would have made sense to do so when the price of oil went as low as a little under US$ 40 per barrel. As it is doubtful if oil will ever go below US$ 30 per barrel, the downside of such a policy will not be so disastrous, at that price. Apart from China, India and Brazil, which of the leading economies is experiencing anything like the high growth rate figures we saw during the boom years before the global financial meltdown occurred? Zilch. As we all know, consumer spending in almost all the major Western economies and Japan is still pretty weak – so where will the demand for oil come from to push up oil prices to the highs we saw when it passed the US$ 100 mark, I ask, dear reader?
Why do we not negotiate with Venezuela instead – and get her to agree that Ghana will be supplied with oil from Venezuela at special prices: should oil prices reach levels that we cannot afford? Will that not be far better than hedging – which will only benefit the fat cats from our financial services sector? Are they not the same bloodsuckers who profited mightily from the Kufuor regime’s daft forays into the piranha-infested waters of the capital markets of the West (when they were piling up debt like there was no tomorrow!) – so why give them yet another opportunity to make huge profits at our expense? Did our politicians not learn anything from the troubles Ashanti Goldfields had – when it was brought to its knees by hedging? They are welcome to gamble with their own personal fortunes – but they must not endanger our nation’s financial well-being by using hedging as an insurance policy against high future oil prices. Talking to Venezuela with that aim in mind is a far better proposition than the lunacy of hedging. A word to the wise…
Tel(powered by Tigo – the one mobile phone network in Ghana that actually works!): + 233 (0) 27 745 3109 & the not-so-hot and clueless Vodafone smartfone: + 233 (0) 21 976238.
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