The Oil Pricing Crisis; A Review of the Current Legal Regulatory Pricing of Petroleum Products in Kenya

ABSTRACT

Energy occupies a pivotal position in any country's search for economic development. The availability of a reliable supply of energy spurs economic development through raised levels of productivity, creation of employment opportunities and income generation. It is indispensable to point out that one of the key sources of energy in Kenya is petroleum and petroleum products. The determination of the price of petroleum products in Kenya has been left to the international market forces in the petroleum sub-sector which are governed by profit-driven multinational companies. This renders Kenya very vulnerable, hence the need for control and regulation of the retail prices of petroleum products. The citizemy needs to be cushioned from the constant price hikes which are usually rippling effects of the dynamics of the international community, for example, the political instability in the Middle East. The government should therefore avail legal mechanisms for stabilizing petroleum prices for purposes of protecting consumers and checking on arbitrary priced fluctuations. The regulatory framework of the retail prices of petroleum products is the province of this research paper. This paper seeks to examine the sufficiency, or lack thereof, of the existent regulatory framework. Hon. Kiraitu Murungi, the energy Minister, with regard to his power to control fuel prices, made a declaration that Kenya should maintain a market-oriented economy. This, in essence, renders the pricing of petroleum products at the mercy of multinational corporations and the dynamics of the international market. This proposed study also seeks to investigate the role of the government in protecting the interests of the consumer, the investors and other stakeholder interests in our capitalist economy. While operating in a free-market economy and business environment, this study proposes to determine whether this environment is favourable to the consumer or not. Another facet of the regulatory framework that this research proposes to investigate is the implementation of and the observance of the principles of fair competition in the petroleum sub-sector.