Saudi Oil Minister Will Not Cut Oil Production

With the oil shortages Malawi has experienced in the past( and here it must be said that the shortage was caused by donors withdrawal of budget support), if the price of crude falls below $40 a barrel, it would be prudent if the authorities in Malawi took advantage of this rare state of events to prevent future oil shortages.
Ideally a bigger more modern refinery as is being built in Zambia would measurably help the economy. But failing that, an increase in fuel reserves would do just fine.
While I’m not too sure of the legality of large millions-of-gallons sized oil reserves, I’d imagine creation of additional diesel and petrol reserves could go a long way into assisting motorists and industry with an insurance policy should we experience another donor-created fuel shortage in Malawi in the future.
For argument’s sake, let’s say  additional storage reserves for the equivalent of around 9 months of fuel in each major city was created….I’m struggling to find a reason why that would be a bad thing, except that if the price fell lower, we’d have paid more for our oil.
While said reserves would be taking account of the present fuel usage only(discounting future increased fuel usage – which is not easy to predict ),  even if prices fell lower than the current $60 a barrel, it would probably help Malawi in preventing an acute and sudden fuel shortage by creating a buffer in which, faced with a similar crisis as that which Malawi faced in 2012, the government would have a short breathing space to find a solution to the shortage.


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