The Energy Regulatory Commission (ERC) is over this weekend expected to announce reviewed fuel pump prices for the period starting 15 October, 2012 to 14 October, 2012. Based on the observed upward trend in international oil prices and weakening of the Shilling over the month of August, we predict that ERC will review the fuel prices upwards.

As posted by Abu Dhabi National Oil Company, the Free On Board (FOB) price of Murban crude oil increased to USD 115.40 per barrel in September 2012, from USD 111.65 per barrel in August 2012.

Data from Central Bank of Kenya (CBK) also show that the shilling weakened against the dollar in September as compared to its performance in August.

As it is the norm, ERC fuel price review will take into consideration current trends in international oil prices, capping the pump prices of the products which are already in the country, such that the importation and other prudently incurred costs are recovered, plus protect the consumer.

Based on the above price movement, our calculations showed that the price of super petrol will rise to KES 112.04, diesel to KES 103.82 and kerosene to KES 81.31.  The current fuel prices are KES 108.95, KES 101.07 and KES 79.65 for super petrol, diesel and kerosene respectively.

Our calculations are based on the relationship between the price of crude oil in the international market, strength of the shilling against major currencies 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.

Our projected pump prices are for Nairobi, the energy regulator (ERC) will post the exact fuel prices over the weekend when it reviews fuel pump prices.

*Calculations are subject to an allowance of  + or – KES 3.