The purpose of this write-up is to show that people in Zambia Zambia will be compared with those obtaining in the US Zambia , like many African countries, a litre is used as the unit of measure for liquid merchandise while gallon is the unit of choice in the United States
In the US, as of September 13, 2010, gasoline (unleaded regular) prices in the East Coast to the West Coast ranged from US$2.536 per gallon to $3.026 per gallon. In terms of litres, the price of gasoline translates to US$0.67 per litre (or ZMK3,316.57 per litre) to US$0.80 per litre (ZMK3,957.38 per litre). Similarly, the price of diesel in the East Coast to the West Coast ranged from US$2.887 per gallon (ZMK3,775.60 per litre) to US$3.142 per gallon (ZMK4,109.09 per litre). Zambian consumers have recently been subjected to two unjustifiable fuel price increases within a short space of time. The upward adjustment have been relentless with due regard to the poverty level in the country. For instance, in January 2010, with the blind-blessing of the ERB, the price of fuel rose by 15 percent followed four months later by another increase in May by an almost comparable 13 percent.
With the new upward adjustment of the price of fuel, regular and diesel fuels are now costing ZMK7,639 per liter and ZMK6,999 respectively. In US dollar terms and on a one gallon basis, the Zambian consumer is now paying US$5.84 per gallon and US$5.35 per gallon for regular and diesel respectively. As you can see from the forgoing discussion, fuel consumers in Zambia are paying more than double the price paid by their counterparts in the United States. Tanking the above illustration into account, the price of unleaded regular should be costing ZMK4,000 and not a crazy price of ZMK7,639 per litre as the case is now. Similarly, the price of diesel should be much lower than the new exaggerated price.
Fuel pricing in Zambia casts a lot of doubt on the kind of economics employed and the competence of those responsible for determining fuel prices. Pricing in Zambia has always defied economic and mathematical logic and pricing trends in most industrial countries where the price of fuel at the pump is largely affected by dynamics of world crude oil prices and not mere price fixes as the case appears to be in Zambia. Although market forces are not perfect in themselves, one would still expect that prices of fuel to depend on the behaviour of world markets. Sadly and unfortunately, fuel pricing in Zambia seems lack economic sense to the extent that energy consumers remain perpetually subject to high prices that have no basis and justification and the mercy of the ERB. Even when the price of crude oil on the world market falls appreciably, the benefit is never passed on to the Zambian consumer. The ERB and other players turn a blind-eye oblivious of the fall in crude oil prices but extremely quick at increasing the fuel price as soon as crude oil edges a little higher.
In the light of the foregoing, it is bizarre to think that rural development can meaningfully be vitalized when the price of energy is prohibitive as illustrated above. Energy is a critical component in the stimulation of development and Zambia's rural development is not immune to it and cannot be achieved by deception but by real intervention strategies such as providing incentives to prospective companies seeking to set up industries or businesses that would ultimately add value to rural areas. What is needed to stimulate rural development is a realistic, purposeful well targeted policy and focused policy. Therefore, mere political statements intended to hoodwink the masses will not by themselves address the problem of lack of public interest to invest in rural areas.
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| September 20, 2010 Fuel Prices at Akron, Pennsylvania (US)- Picture Courtesy of Lusaka Gossip |
With the new upward adjustment of the price of fuel, regular and diesel fuels are now costing ZMK7,639 per liter and ZMK6,999 respectively. In US dollar terms and on a one gallon basis, the Zambian consumer is now paying US$5.84 per gallon and US$5.35 per gallon for regular and diesel respectively. As you can see from the forgoing discussion, fuel consumers in Zambia are paying more than double the price paid by their counterparts in the United States. Tanking the above illustration into account, the price of unleaded regular should be costing ZMK4,000 and not a crazy price of ZMK7,639 per litre as the case is now. Similarly, the price of diesel should be much lower than the new exaggerated price.
Fuel pricing in Zambia casts a lot of doubt on the kind of economics employed and the competence of those responsible for determining fuel prices. Pricing in Zambia has always defied economic and mathematical logic and pricing trends in most industrial countries where the price of fuel at the pump is largely affected by dynamics of world crude oil prices and not mere price fixes as the case appears to be in Zambia. Although market forces are not perfect in themselves, one would still expect that prices of fuel to depend on the behaviour of world markets. Sadly and unfortunately, fuel pricing in Zambia seems lack economic sense to the extent that energy consumers remain perpetually subject to high prices that have no basis and justification and the mercy of the ERB. Even when the price of crude oil on the world market falls appreciably, the benefit is never passed on to the Zambian consumer. The ERB and other players turn a blind-eye oblivious of the fall in crude oil prices but extremely quick at increasing the fuel price as soon as crude oil edges a little higher.
In the light of the foregoing, it is bizarre to think that rural development can meaningfully be vitalized when the price of energy is prohibitive as illustrated above. Energy is a critical component in the stimulation of development and Zambia's rural development is not immune to it and cannot be achieved by deception but by real intervention strategies such as providing incentives to prospective companies seeking to set up industries or businesses that would ultimately add value to rural areas. What is needed to stimulate rural development is a realistic, purposeful well targeted policy and focused policy. Therefore, mere political statements intended to hoodwink the masses will not by themselves address the problem of lack of public interest to invest in rural areas.
