Kenyans this morning woke up to another drop in fuel prices, this coming despite rice in international oil prices. As posted in the August 2012 petroleum prices press release by the energy regulator, (ERC), the Free On Board (FOB) price of Murban crude oil lifted in July 2012 was posted at USD 101.75 per barrel, reflecting an increase of 4.5 per cent from USD 97.35 per barrel in June 2012.

Wait, we had predicted an increment. So what happened?

For starters, the average landed cost of imported super petrol decreased by 5.12% from USD 1051.31 per tonne in June 2012 to USD 997.52 per tonne in July 2012. This contributed to the price drop of super petrol from KES 108.46 per liter to KES 106.48 per liter in Nairobi.

The average landed cost of imported diesel decreased by 1.45 per cent, from USD 947.06 per tonne in June 2012 to USD 933.35 per tonne in July 2012. The average landed cost of imported Kerosene, though, increased by 2.02 per cent, from USD 909.92 to USD 928.33 per tonne over the same period. This though resulted in a drop in Kerosene retail prices to KES 73.97 from KES 74.40 per liter.

An improvement of the mean monthly exchange rate also played a contributory role in the fuel price drop. The mean exchange rate improved marginally by 0.34 per cent to KES 84.11 per USD in July 2012 compared to KES 84.40 per USD in June 2012.

Despite this month’s fuel price drop, the energy regulator warned that an upward trend in the price of crude and refined products had been observed in the international market over the last month and may diversely affect prices in subsequent price reviews.