By Gordon Opiyo
How Kenyans were conned in the Petrol Prices: In 2005, I was very active in the Business Desk of the Newsroom. My bias was on the mega scandals. Around that time, several Kenyans from North Eastern Region started aggressively investing in the Oil Industry, putting up Petrol Stations all over.
These new Petrol Stations were giving the established names a real run for their money. Kenyans started moving from the established names to the new Petrol Stations- the effects of Competition started biting. Just like Equity Bank took over the Banking Industry, the big names in the petroleum industry got worried that the new Kids on the block would turn the tables on them. So they came with a very clever way to con Kenyans- by pretending to “Care, and Protect” Kenyans. They came up with some body called Energy Regulations Commission- a body that “Would set prices- in order to protect Kenyans from ‘Exploitation’ ”
The brains behind ERC were the big players in the Oil Industry, and the motive was to stop the newer more efficient Oil Companies from charging lower, and making it hard for new players to join the industry.With Price Caps- the Psychology of Pricing took effect where those companies charging lower were seen as having “lower quality petrol”. At that time, I raised the alarm about the fallacy of Price Controls.
Competition always brings the best equilibrium in the market- any other system is open to abuse. It is competition that brought the cost of mobile phone services to the current level, it is competition that made air travel in Kenya affordable, it is competition that made banking services affordable.
With Iran joining the world Oil Market, Petrol Prices are supposed to drop to record lows this year. But Kenyans will still pay high prices due to the energy Cartel. For Kenyans to enjoy the best prices in Petrol and other fuels- ERC must go- there are no two ways about it