Diesel in first price fall since May as petrol rises

Fuel prices were Monday adjusted by the smallest margin since January, offering some relief to motorist who have witnessed sharp fluctuations in recent months.

Motorists will pay Sh1.33 more for a litre of petrol and 12 cents less for diesel—a change that is the smallest since June 2018.

Petrol, whose adjustment was the least since January, will retail at Sh105.28 in Nairobi, marking the fourth rise in a row since it hit a four-year low in May when it retailed at Sh83.33 a litre.

Diesel has recorded the first drop since May to sell at Sh94.51 starting today following the review linked to stable crude prices on the global markets.

The Energy and Petroleum Regulatory Authority said the changes were due to marginal adjustments in crude prices.

Volatility in local fuel prices due to global changes became clear this year when motorists enjoyed big cuts in petrol and diesel costs that were followed by spikes.

In July, fuel prices jumped by the biggest margin since 2007 when official data on pump costs are available.

Motorists in Nairobi paid Sh11.38 more for a litre of super petrol at Sh100.48.

But the price of petrol had dropped by Sh38.60 a litre between March and May, easing pressure on transport costs and inflation.

The costs of energy and transport have a significant weighting in the basket of goods and services that is used to measure inflation in the country.

The Energy ministry has introduced a subsidy scheme that will see motorists not bear costs of diesel prices above $50 a barrel.

The subsidy will be supported by billions of shillings that will be raised from fuel consumers through the Petroleum Development Levy, which was increased to Sh5.40 a litre in July from 40 cents, representing a 1,250 percent rise.

The fund is meant to cushion consumers from volatility in fuel prices but it will also see motorists lose out when paying the Sh5.40 for a litre at the pump.

The economy uses diesel for transportation, power generation and running of agricultural machinery such as tractors, with a direct impact on the cost of farm produce.

Crude oil prices plunged after a fallout between Saudi Arabia and Russia over production cuts in the wake of the Covid-19 pandemic and depressed demand for energy on slowed economic activities.

But reduced tension between China and Saudi Arabia, backed by increased road traffic in some of the world’s major cities in June, sparked a rally in crude oil prices.

Kenya quoted average crude prices in February at $56.10, which fell $17.64 in April before starting a marginal increase to $44.28 in July, which is the basis for the current pump prices.

The fuel prices that will apply from today and remain in force until the 14th day of October was based on August crude cost of $45.74.

Kerosene prices, which jumped Sh18 a litre last month, is 50 cents cheaper at Sh83.15 a litre in Nairobi.