BusinessPeople Daily

What new fuel prices mean to your pocket

Steve Umidha @steveumidha

Consumers should brace themselves for tough weeks ahead after the Energy Regulatory Commission (ERC) announced an increase in prices of fuel in its latest monthly review.

This means the cost of living goes up for the next one month as pump prices of super petrol, diesel and kerosene have climbed by Sh2.38, Sh3.11 and Sh2.99 a litre respectively effective today.

Fuel prices had shown signs of sharp rises over the last four months even before the introduction of eight per cent Value Added Tax on petroleum products.

“In Nairobi super petrol will retail at Sh118.11, diesel Sh112.83 while kerosene will sell for Sh 111.83. In Mombasa, new price for petrol is Sh115.48, while diesel Sh110.21 and kerosene Sh109.20. In Kisumu prices have risen to Sh119.56, Sh114.50 and Sh113.49 for super, diesel and kerosene respectively,” ERC said in a statement yesterday.

The price of super petrol in October jumped by Sh3.37 a litre while that of diesel also went up by Sh1.85 as well as kerosene which also increased by Sh1.82.

Cost of petrol in the September review, however, reduced by Sh2.21 compared to diesel and kerosene which rose marginally by Sh0.39 and Sh0.29 during that period.

This month’s review, the regulator said, was as a result of the average landed cost of imported super petrol rising by 4.02 per cent from $729.04 (Sh74,362) per tonne in September to $758.34 (Sh77,351) per tonne last month, while diesel increased by 5.84 per cent from $700.41 (Sh71,442) per tonne to $741.33 (Sh75,616)  per tonne and kerosene rising by 5.80 per cent from $721.64 (Sh73,607)  per tonne to $763.47 (Sh77,874) per tonne.

Cost of goods

Not only are motorists expected to feel the squeeze from the new pricing, but also households depending on whether retailers and producers will absorb the cost or decide to pass it on to consumers.

Cost of goods and services is directly affected by the cost of fuel because it is the driver of the economy as transport sector is driven by petroleum products, thus when such hikes occur consumers are bound to be hit hard.

Economic indicators for the last few months are telling. Basic utilities such as housing, water, electricity, gas and other fuels’ index rose by 0.20 per cent last month.

On the global market, crude oil prices rose yesterday, recouping some of the previous session’s slide, on the growing prospect of the organisation of oil exporting countries (OPEC) and allied producers cutting output at a meeting next month to prop up the market.

Prices rallied toward $67 (Sh6,834) after Reuters reported OPEC and its partners are discussing a proposal to cut output by up to 1.4 million barrels per day (bpd), a larger figure than officials have mentioned previously.

“The dramatic selling across the oil markets in recent days has come to a brief pause,” said Jameel Ahmad, head of market research at futures brokerage FXTM. “It is very much possible that the oil markets have not yet found a floor.”

The price of Brent crude has fallen by more than 20 per cent since early October on concern about excess supply and slowing demand, one of the biggest declines since a price collapse in 2014.

Show More

Related Articles