Why fuel prices are still high despite falling dollar
Nov 04, 2015
Fuel prices have remained high despite the shilling gaining ground against the dollar amid low world oil prices.
By Chris Kiwawulo
Fuel prices have remained high despite the shilling gaining ground against the dollar amid low world oil prices.
For the last one month, the Ugandan shilling has gained ground against the dollar with some forex bureaus now trading it at sh3,435 and sh3,540 for buying and selling respectively. The dollar had risen to alarming levels of sh3,740 and sh3,780 buying and selling respectively.
At the beginning of 2012, world crude oil prices were going at over $100 a barrel, but the prices started going down in July that year and a barrel is at $47.90 as of today.
A survey of pump prices in and around the city showed that fuel prices have continued to rise with some stations selling petrol at as high as sh3,900 and diesel at sh3,350. The sh3,900 mark for petrol was witnessed at Shell along Lugogo Bypass.
However, most filling stations visited by New Vision were selling petrol at between sh3,700 and 3800, and diesel at between sh3,100 and sh3,300.
The fuel dealers’ national chairman, Rajni Tailor, also wondered why fuel prices were not coming down despite the dollar going down.
“We have been discussing with fuel dealers why the pump prices have continued to stay up despite the dollar going down and the world prices being low. We also talked about the fluctuating gold prices. They should not affect oil prices,” he said.
But Tailor referred New Vision to the fuel dealers saying, “they should be in a better position to explain why they are not reducing the pump prices.”
Total Uganda managing director, Florentin De-Loppinot, declined to comment on the pump prices, saying he needed some time.
But an official on condition of anonymity said the pump prices were still high because they have a lot of fuel in stock which they procured a couple of weeks ago when the dollar rate was still high.
Mogas Fuel manager Dharmendra Agarwal said that the dollar rate are the moment cannot affect local pump prices.
“The currency (dollar) has appreciated by 30% between January and September (against the shilling). It will take some time for pump prices to go down because fuel is not bought like other commodities where you go to the market, pay and get it right away. It is a cycle,” he explained.
Agarwal noted that fuel that will be sold in the next 45 days has to come in 45 days before, adding that the current fuel in their stock was purchased when the dollar rate was still high.
“Probably the reduced pump prices will be reflected in the fuel that we shall order in November and it will come in in December,” he anticipated.
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