EFFECTS OF PRICE REGULATIONS ON THE PERFORMANCE OF KENYA'S OIL SECTOR

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ABSTRACT

 

The purpose of this report was to address the effects of oil price regulation on the performance of Kenya’s oil sector. Oil Price regulation is an ongoing effort in ensuring effective conveyance of price in the sector by producers, wholesalers and retailers in the oil sector. It is a framework adopted to ensure the protection of consumers against exploitation by dealers due to lack of market information. It  is however difficult to assess the impact of oil price regulations as minimal research exists to determine the resulting effects of oil price regulations in Kenya, this is because most researches that exist have been carried out in the developed world and their findings cannot be applied in Kenya adequately.  Therefore, the researcher sought to explore the impact of oil price regulation on oil price trends, oil supply and oil consumer satisfaction. The aim was to acquire knowledge and establish the effects of the Energy Regulatory Commission’s (ERC) price regulations on the performance of Kenya’s oil sector. The study was quantitative and data collection was done through open-ended and closed-ended questionnaire administered to gather responses used in drawing conclusions regarding this study. The study has established that the regulation by ERC of fuel prices has stabilized the retail price of oil in the market, has increased the availability of oil in the market and has improved oil consumer satisfaction. The study recommends that government and the policy makers in the energy sector should improve the ERC act of 2006 to make the commission fix the prices at a given price that can be afforded by all consumers in the country and the review of the oil prices be done yearly and not monthly in order to stabilize the prices and fully eliminate the cartels that may utilize loopholes in the energy sector to manipulate oil prices. The study recommends that the government and the ERC should inform the public on a monthly basis regarding the available stocks of oil in the country. This will help avert the possibility of oil dealers creating artificial shortages in order to influence the price increase to reap maximum profit. This will greatly reduce the uncertainty about the future availability of the oil in the market.

Author: 
Walyaula Davis Khamala
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