Oil prices drop again as global economy slow down due to financial crisis in Europe

By Ben Kinyanjui

Oil prices continued to drop as the impact of global economic slowdown sparked by the financial crisis affecting most European countries.

Reduced purchasing power in Europe has affected manufacturing in most parts of the world hence reducing demand for oil imports that has seen oil prices stabilise. A tonne of crude was imported into Kenya at $1069.01 in January.

The Energy Regulatory Commission (ERC) Tuesday announced a 63 cents decrease for super petrol which will now retail at Sh111.32 per litre.

Diesel dropped by Sh2.61 to stand at 105.29 per litre while Kerosene equally decreased significantly by Sh3.37 to retail at Sh83.74 per litre.

Besides the lower global oil prices, the stabilising local currency against the US dollar was positively impacting on domestic fuel prices over the review period.

“The average landed cost of imported super petrol increased by 6.62 percent from US $1002.68 per tonne in December 2011 to US $1069.01 per tonne in January 2012,” ERC Director General Kaburu Mwirichia explained in a statement.

Over the same period, imported diesel decreased by 2.49 percent, while the cost of imported kerosene increased slightly by 0.88 percent.

High fuel prices were one of the twin factors blamed for soaring inflation rate experienced in the country last year.

The fuel import bill rose from an average of 21.6 percent of the total cost of imports in 2010 to peak at 31.1 percent in August 2011.

There has been a steady drop of fuel prices in the two months following with the price of super petrol decreasing by Sh7.11 per litre and diesel down by Sh3.08 per litre in January.