The Energy Regulatory Commission (ERC) is expected to review fuel pump prices for the period 15th July 2012 to 15th August 2012 on 14th July 2012. We project a drop in pump prices following a decline in international crude oil prices. The Abu Dhabi National Oil Company posted the price of Murban crude oil at USD 97.35 in June 2012, a drop in price from USD 110.60 in April 2012.
Based on the above price movement, we calculated the expected pump prices for the period beginning 15th July 2012 to 15th August 2012. Our calculations are based on the relationship between the price of crude oil in the international market and the prices set by ERC over the past 12 months. It is important to note, we took the assumption that costs associated with refining, production, transportation and prevailing taxes remained constant.
Based on this, we expect that the price of super petrol to drop to Ksh 103.74, diesel to Ksh 96.54 and kerosene to Ksh 73.08. Please give an allowance of + or – Ksh 3 in the prices above. The current fuel prices are Ksh 117.67, Ksh 105.51 and Ksh 83.20 for super petrol, diesel and kerosene respectively.
As posted by the Business Daily, the energy regulator states that the continued fall in international crude oil prices will only translate to lower pump prices in Kenya if the price fall extends to July 9. As at the beginning of July 2012, international crude oil prices have shown signs of rising so the price of super petrol for instance might not go below Ksh 110.
Our projected prices are based on the drop in international crude oil prices posted for June 2012, the energy regulator will post the exact fuel prices on 14th July 2012 when it reviews fuel pump prices.
These projected prices are for Nairobi only.