High cost of fuel drives down consumption

When travellers got stranded at a bus station after matatu operators protested the high cost of fuel. [David Gichuru, Standard]

The consumption of petroleum products in the country dropped over the six-month period to December as the cost of fuel went beyond the reach of many Kenyans.

A new report by the Energy and Petroleum Regulatory Authority (Epra) shows that the consumption of different fuels dropped by 2.6 per cent following high prices that have persisted to date.

A drop in consumption of petroleum products is usually a bad indicator for an economy and could be a pointer to stagnation of industries such as transport, agriculture and manufacturing that are heavy users of fuel.

This is particularly the case for diesel, which powers these industries.

"The total domestic demand for petroleum products decreased by 2.58 per cent to 2.8 million cubic metres compared to a similar period in 2021," said Epra in a new report tracking developments in the petroleum and electricity sectors. The hardest hit was cooking gas, with many households reducing their consumption of the fuel as the cost of the fuel went up significantly.

A different set of data by the Kenya National Bureau of Statistics shows that over the nine months to September, consumption of Liquefied Petroleum Gas (LPG) reduced by 18 per cent to 224,810 metric tonnes compared to 274,650 tonnes over a similar period in 2021. Refilling a 13-kilogramme cylinder over the nine-month period to September last year was Sh3,500, a record high. This has since eased slightly to Sh3,200. This is as the price of super petrol reached Sh178.62 a litre, also an all-time high, which has since been surpassed by the current price of Sh179.30 per litre in Nairobi. The higher cost of petrol, largely used by private motorists, saw many reduce travel.

Diesel at the time sold for Sh165 a litre. Electricity consumption, on the other hand, went up, defying the higher cost of power.

Prices for electricity started going up in September after holding steady between January and August, aided by the 15 per cent reduction that was implemented in January following a directive by former President Uhuru Kenyatta.

During the half to December, the amount of power consumed in the country rose to 6,670.9 gigawatt hours.