High fuel prices are unavoidable

In Summary

• The IMF says that fuel subsidies are not green because they encourage extraction of fossil fuels.

 • EPRA says it will not implement fuel subsidies but will use the Petroleum Development Levy to stabilise prices

The IMF has said that fuel subsidies globally cost $1.3 trillion and perpetuate the extraction of fossil fuels as well as placing an unsustainable burden on the budgets of many countries.

Earlier this month the Energy and Petroleum Regulatory Authority denied that it was re-introducing the fuel subsidies of President Uhuru Kenyatta's regime but said it was instead using the Petroleum Development Levy to stabilise fuel prices.

This statement may be 'smoke and mirrors' but at least the government of President William Ruto recognises that fuel subsidies are dangerous and unaffordable.

Of course, no-one likes high fuel prices and everyone wishes they could be reduced. But this is not possible without subsidies because the exchange rate is at 145 Kenya shillings to the US dollar and global oil prices are still high. And the subsidies promised by the last government have not been paid to the oil marketers because government does not have the money.

Similarly, a high percentage of the fuel price is tax but this is still needed to reduce the budget deficit. 

We cannot avoid high fuel prices. They are unavoidable. We just have to learn to live with them. 

Quote of the day: "Where you see wrong or inequality or injustice, speak out, because this is your country. This is your democracy. Make it. Protect it. Pass it on."

Thurgood Marshall
He became the first African American Supreme Court Justice on August 30, 1967

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