Pure Gold for exchange of "black Gold" - crude oil to aid in arresting the falling cedi.

As the engine for modern economies, oil is a very important commodity and volatile due to supply and demand as well as geopolitical factors . The supply disruptions of crude oil caused by the Ukraine war has resulted in global inflation. The high cost of living due to high prices of fuel and food has created economic crisis in many countries and Ghana is not an exception.

The high inflation has caused the cedi to fall flat to the dollar. Before the Christmas the dollar rose as high as GHC15. The high demand of the dollar for importation of goods, especially petroleum products which are the most imported products to Ghana, are driving the dollar high. The resulting fluctuation of the dollar is adding more fuel to the economic crisis caused by high prices of fuel and food.

In order to stabilize the situation the government of Ghana has introduced the oil for gold policy. The Petrodollar system makes the US dollar the main currency for oil trading. The deal was introduced in the 1970s between US and Saudi Arabia to funnel Saudi petrodollars into US Treasuries. In return, the US government would supply weapons to the Saudis and ensure their national security.

With the oil for gold which is more stable commodity, the government of Ghana hopes to reduce pressure on the cedi and as a result bring down the price of fuel. However, importing refined petroleum products instead of crude oil would be difficult to achieve the goal for fuel price reduction.

This is what some governments are doing to respond to the high fuel and energy prices.

1. The US government for the first time ordered the release of more than 1 million barrels per day of crude oil from its Strategic Petroleum Reserves - a historic large release. This measure has helped stabilize the price of oil and control inflation in the US.
2. European countries have put a cap on the cost of electricity and gas to help their citizens cope with the high cost of energy and control inflation.
3. Other governments have also removed petrol taxes to help reduce the burden on their people.

In my opinion, the best policy for Ghana will be to refine our own crude oil from our oilfields. Have our cake and eat it too.

This policy will ensure our energy security with less external pressures from the dollar and price fluctuations. We can contract the processing of our crude oil with any reliable refinery anywhere in the world if ours are not operational yet.