The price of refined petrol does not follow the same trend as crude oil

By MUNGAI KIHANYA

The Sunday Nation

Nairobi,

19 October 2025

Every time it is reported that the price of crude oil has gone down, many Kenyans come out demanding that the Energy and Petroleum Regulatory Authority (EPRA) should reduce the retail price of fuel in the country. But we never hear similar demands when the crude oil prices increase! On the contrary, there is a common belief that, “when the crude oil price goes up, our pump price goes up, but when crude comes down, our pump price does not”. Is this true?

Kenya implemented price controls on petroleum in 2009 (16 years ago). In that year, the then Energy Regulatory Commission – the former name of EPRA – developed a pricing formular for petroleum fuel and this is still in use today. Of course, the values of the inputs have changed (e.g., the Road Maintenance Levy was recently increased from Sh18 to Sh25) but the formula is the same.

At the time of developing the formula, the Kenya Petroleum Refineries Ltd (KPRL) was operational even though it wasn’t producing enough fuel to meet the national requirements. So, the formula captured both the cost of importing crude oil and refined fuels and then added the cost factors for each – separately.

Since 2013, the refinery has not been operational and, therefore, Kenya has been importing only refined petroleum for the last 12 years. For that reason, it is wrong to monitor the prices of crude oil and expect that our pump prices will follow the same trend.

I tracked down the monthly movements of international Murban crude oil and international refined petrol over the last 12 months (October 2024 to September 2025) and found that they do not follow the same trend.

In the months of December 2024, February, March, and August 2025, the international market price of crude oil increased while that of refined petroleum decreased. In January, May and June 2025, crude went down while refined went up.

It was only in four months – November, April, July and September – that the two prices moved in the same direction. Over the entire 12-month period from October 2024 to September 2025, the crude oil price went down by 8.75 per cent while that of refine petroleum increased by about 0.2pc. Both went down, yes; but by significantly different proportions.

This is the reason why I will always remind Kenyans not to expect retail petrol prices to follow the trend of crude oil. Indeed, EPRA must stop making any mention of crude oil prices in their monthly fuel price announcements.