Skyrocketing fuel prices

Ugandans are being forced to pay excessively for fuel, with a litre of fuel edging closer to the Shs 7,000 mark while that of diesel is inching towards Shs 6,500.

The major Petrol stations like Total and Shell have been setting the ugly pace in the increment of prices, with the minnows like Stabex, Hass, Petrocity, leaving motorists on the edge of totally failing to fuel their cars as the prices take a turn for the worse.

Fuel dealers are blaming the skyrocketing prices on the disruptions in the supply chain caused by the Russia- Ukraine war, the high demand that followed the easing of the #Covid-19 restrictions and the high tax regimes imposed by the Government.

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Granted, we know that Russia accounts for nearly 10% of the world’s oil supply and the sanctions imposed by the US and its Western allies have not helped matters, as OPEC countries are yet to fill the supply void left by the Russians.

However, if we are to dig deeper into crisis, that may be untrue. Let us use the measure of the price of a gallon of fuel. According to GlobalPrices.com, a website that tracks fuel prices in 150 countries, a gallon (3.5 litres) of fuel costs $4.8 (Shs 15,200) in the United States.

In Uganda, however, 3.5 litres of petrol would cost you Shs 19,500,far more than what is paid in the United States, which is a far bigger economy than Uganda. Of course, fuel dealers would argue that they import their products, unlike the US.

So let us now compare ourselves to our regional peers, some like Rwanda, Burundi and DRC, which import their fuel through Uganda for us to get a clearer picture.

Kenya and Tanzania did the reasonable economic move by introducing subsidies that have alleviated the pump price with Kenya averaging at (Shs4,857.825 a litre) and Tanzania (Shs4,830.085 a litre), according to the Global Petrol Prices’ index.

What explains the fact that   landlocked Rwanda has cheaper fuel at Shs5,372.095 and the Democratic Republic of Congo (Shs4,412.949 a litre); Burundi (Shs4,990.594 a litre); and South Sudan (Shs4,770.070)? yet all these incur more costs before fuel gets to the pump?

This is probably because the fuel dealers there do not have the luxury to increase pump prices as and when they feel like.

Mr John Friday, the Assistant Commissioner for Petroleum Supply, at the Ministry of Energy and Mineral Development, caused a stir this week when he indicated that: “the prices at the pumps today are relatively okay. The situation has not reached a level where we must intervene.” That was quite an unfortunate remark.

What level must the price of fuel get to before the Government intervenes? Granted, this is a free market economy that is controlled by the forces of demand and supply but that does not make the Government a lame-duck.

Just like hospitals were akin to vultures as Covid-19 ravaged Ugandans, so are the petrol station owners.