How Ruto's aggression over fuel prices with EAC neighbours strains ties

President William Ruto shakes hands with his Uganda counterpart Yoweri Museveni as Tanzania's Samia Suluhu looks on during a past event. [PCS]

For avoidance of doubt, the economic reasons why a country’s level of development impacts pump prices are diametrically different from those implied by President William Ruto in his comments as to why oil prices in Kenya are the highest for the region.

Diplomatically, such insinuations are completely unjustifiable. They may easily pass as bullying from big brother or looking down upon not only our neighbours but also strategic allies in development. This is especially so given that it is not the first time the President has made such misplaced comparisons.

From the optics of numbers alone, it is true that pump prices in Kenya at sh197.60 for Petrol and sh196.63 for diesel still remain among the highest around the world on average. This is even after a dramatic executive fiat to reduce Value Added Tax (VAT) from sixteen to eight per cent.

A simple Google search on average gasoline prices for a number of countries returns that as of April 20, 2026, average prices in the US were U$1.16 (equivalent of Sh150.8 per litre at an exchange rate of Sh130 to the dollar).

India gasoline prices are at $1.08 (Sh140.4), China $1.40 (Sh182) and South Africa $1.39 (Sh180.7). The world average on Monday, April 20, was $1.42 (Sh184.6).

Therefore, if indeed it was a higher level of development that determines pump prices for a country, then our prices should be much less compared to the above sampled prices at the beginning of the week.

The US is the largest and probably most developed economy in the world, while China, India and South Africa are high-middle-income countries. Kenya is a low-middle-income country as per official data (but possibly still a poor country from lived realities on the ground). Comparative prices for countries in the Eastern Africa region have been widely shared on both mainstream and social media. Even with the eight per cent VAT and cash subsidies, our prices remain among the highest in the region. Without the last-minute interventions, Kenya’s pump prices at Sh206.6 for petrol and Sh206.63 for diesel would have been among the highest in the world.

The logical question then that we must ask is: what really drives pump prices for a country?

In economic literature, a country’s level of development can indeed influence oil prices for three main reasons.

First is due to rapid industrialisation that may lead to higher income levels, enabling more people in a country to own vehicles and other energy needs, thus pushing demand upwards. Such market forces would thus lead to an increase in pump prices.

The question here is: Has President Ruto’s administration made any significant impacts to household incomes or has he raided it way from them?

The second reason is due to rapid infrastructure investments, especially like in the Kenyan case where levies are added to landed cost of oil to fund big projects. Ruto’s association of the Kenyan road network with pump prices in the country is actually linked to this factor. The mischief arises when he deflects the fact that this is a government’s policy choice as opposed to a purely economic factor. Several levies and taxes imposed on petroleum products are as a result of decisions of various administrations.

For instance, it is Ruto’s administration that doubled VAT on all petroleum products from eight to 16 per cent through the Finance Act 2023, increased Road Maintenance Levy (RML) by Sh7 from Sh18 to Sh25 per litre through the Finance Act 2024 and removed all fuel subsidies as soon as he assumed office in September 2022. Thus, the dramatic events of this week are simply a walk back on his administration’s policies that industry experts and economists kept warning about.

The third factor as to why levels of development may impact pump prices has to do with the economic structure of a country. More developed countries can achieve better energy efficiencies in production and distribution logistics or through shifting their economies towards alternative energy sources that reduce overreliance on oil. China easily comes to mind here as a leader for shifting its economy to electric cars and motorcycles on a large scale.

At the geo-political level, the main determinants of oil prices include global supply and demand, policy choices of powerful lobby groups like the Organisation of the Petroleum Exporting Countries (OPEC) and major oil producers, geopolitical stability, currency exchange rates, refinery capacity and costs, taxes and local policies, and future speculations by investors and hedge funds in the futures market.

For example, the ongoing pump price increases are largely driven by geopolitical conflicts in the Middle East that have disrupted supply chains and transport corridors. However, the specific impact at the country level has largely been influenced by policy response at the country level and long-term strategic planning for each economy.

India has managed to retain a stable pump price despite the crisis through government policies. On the other hand, South Africa has seen sharp pump price increases because of the double shocks from supply disruptions and weakening of the Rand.

From a strategic point of view, President Ruto would be better advised to minimise or avoid commenting on every matter trending in the country, unless he is proposing a well-reasoned policy response to emerging issues of public interest.

For instance, the majority of Kenyans are well informed of the unfolding crisis in the Middle East and were aware they would have to pay for it in one way or another, like other citizens of the world. In fact, as soon as the regulator, Energy and Petroleum Regulatory Authority, shared the prices for the April 15 – May 14 cycle, social media had many posters alluding to that fact. However, what the majority of Kenyans cannot reconcile with is the multibillion-dollar scandal that unfolded over the Easter weekend and the lack of decisive action on the part of the government to unravel the truth and deal conclusively with the perpetrators.

Instead of taking a strategic response to an external problem to cushion or minimise the impact on her citizens, those entrusted with public duty chose to capitalise on the crisis for obscene private profits. The investigative agencies, together with the respective bearers of political responsibility, have resorted to non-action as a cover-up, possibly to shield close allies or friends, while the public bears the ultimate burden of such negligence of duty.

Why then would any citizen of sound mind not be annoyed with their own government? Why would they not see the President’s attempt to draw comparisons to the annoyance of our neighbours as a tragic comedy of sorts?

For the economy, energy costs are one of the most disruptive, with widespread and immediate impact to both livelihoods and cost of living.

As a result, without any breakthrough in sight for the conflict in Iran, Kenyans must brace themselves for price escalation for basic goods and essential services due to inflation and the cost of credit.

As inflation spirals in response to pump prices, the Monetary Policy Committee may have no choice but to deploy interest rate increases as a policy response to contain the inflation to within the policy target.

As Kenyans brace themselves to overcome this crisis, like any other before it, the least they expect from their government is policy coherence, a duty of care and well-reasoned interventions, not comedy that embarrasses our collective conscience among neighbours and friends, or plunder to feed individual greed from those they entrusted with the instruments of power.