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Saturday, August 8, 2020

Kenyans won’t get the big fuel price cuts in rest of the world, says PS

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Price of Fuel in Kenya: On April 20, US oil prices turned negative for the first time ever as the great oil crash of 2020 took a bizarre turn. Crude finished at -$37.63 a barrel, marking the only time it has gone below zero since oil futures began trading on NYMEX in 1983. The historic collapse showed just how terribly oversupplied the oil market has become. There are real fears that the world will soon run out of places to store barrels. The oil prices in the middle east have been falling too, even though they are yet to go negative.

These falls have raised hopes that Kenyans may soon start to enjoy low prices at the pump. But this dream has now been burst. Kenyans should not expect to enjoy the low fuel prices that the rest of the world has been enjoying.

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According to a report that appeared in a local daily that quoted the Permanent Secretary for Petroleum and Energy Andrew Kamau, the fall in prices have nothing to do with the way oil is imported and priced in Kenya. “The WTI is a US pricing mechanism and is based on oil speculations. It has nothing specific to do with how we import and price for oil here. If you check the Platts, you get the real price from dealers who handle the physical oil,” PS Kamau told the Business Daily.

He further explained that Kenya uses Platts quote for kerosene while Gasoil Arab Gulf and Singapore Platts are used for petrol in determining imports through the Open Tender System (OTS) run by the Petroleum Department.

“Under the OTS, however, Kenya has a one-month lag in the importation of fuel, which means the May 14 fuel prices will be determined by the March and April crude prices hence there is no immediate relationship with what happens in the international markets,” the report in the Business Daily further said on the price of fuel in Kenya.

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