The latest fuel price review saw the energy regulator (ERC) lower fuel prices by margins never seen before in ERC’s history of regulating fuel prices. The price of super petrol for instance dropped by Ksh 9.21, from Ksh 117.67 to Ksh 108.46, while that of kerosene dropped by Ksh 8.8, from Ksh 83.20 to Ksh 74.40. This came as a sigh of relief to the local mwananchi (citizen) who has been struggling to cope with the high costs of living.

Let’s look at the factors that influenced this price drop.

For starters, the Free On Board (FOB) price of Murban crude oil went down in June 2012, it was posted at USD 97.35 per barrel, reflecting a 11.98 per cent price decrease from USD 110.60 per barrel in May 2012.

The average landed cost of imported super petrol decreased by 8.01 per cent, from USD 1,142.89 per tonne in May 2012 to USD 1,051.31 per tonne in June 2012. Over the same period, the average landed of cost of diesel decreased by 8.74 per cent, from USD 1,037.81 per tonne in May 2012 to USD 947.06 per tonne in June 2012. The average landed cost of kerosene, on the other hand decreased by 0.19 per cent, from USD 1,019.44 per tonne in May 2012 to USD 1,017.55 per tonne in June 2012.

In contrast to what was the case in the previous fuel price review, the mean monthly exchange rate improved marginally, by 0.40 per cent, to Ksh 84.40 to the dollar in June 2012 as compared to Ksh 84.74 to the dollar in May 2012. Further strengthening of the shilling against the dollar would have resulted in much lower fuel prices.

It’s the above factors that influenced the drop in fuel prices. Click here to view the trend in fuel prices for the past 13 months.

Edit: We had erroneously indicated that "FOB) price of Murban crude oil went down in June 2012" on the third paragraph. We have corrected this

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