Intervention Analysis of COVID-19: Implications for Fuel Prices in Ghana

Abstract

The COVID-19 pandemic has affected health systems and economies worldwide, particularly the energy industry. As in many other countries, the energy industry in Ghana suffered major fallout as increasing uncertainty and dramatic swings in global fuel demand became key drivers. Fuel was an essential input that enabled economic activities to continue operating during the period of mobility restrictions. The objective of this study is to examine the effects of the COVID-19 pandemic on fuel prices in Ghana from January 2016 to April 2023. An autoregressive integrated moving average model under the Box–Tiao intervention framework is used, with January 2021 taken as an intervention point corresponding to the structural change related to the loosening of pandemic-related mobility restrictions. Data from the pre-intervention period (2016–2020) are utilised to assess the fundamental dynamics of fuel prices and to produce counterfactual projections for the post-intervention phase. The COVID-19 effect is identified as the deviation between observed fuel prices and the predicted counterfactual path implied by the pre-pandemic ARIMA structure. The results suggest a statistically significant increase in the mean fuel price after the intervention. The estimated average causal effect is GH¢4.36 per litre. This means a relative increase of about 87% compared to the counterfactual scenario. The findings provide empirical evidence that the dynamics of fuel prices in Ghana underwent a structural change due to pandemic-related mobility restrictions and their subsequent relaxation. The research demonstrates the efficacy of intervention time-series models to identify the economic consequences of significant external shocks in emerging energy markets.