A Fuel Crisis in Perspective

Uganda has been in a "fuel crisis" for the last two or three weeks. The country uses 3 millions litres of petroleum per day, all of it imported from Kenya by truck on one two-lane road from Nairobi. The port in Mombassa, through which all of the oil for Kenya, Uganda, Rwanda, and eastern Congo flows, had been shut down for repairs, and now the Kenyan government revoked the importing license for Kenya's main oil importer (the company has since paid its taxes and its license is being reinstated). The price of gas has increased 21% from about 2800 UGX to 3400 UGX per litre in the past two weeks.

Transportation prices have increased and, most importantly for a Peace Corps Volunteer, the local price of beer has also increased.

This demonstrates the volatility in prices here, and in most of the developing world. If one thing happens to the transportation network, the entire country is directly effected. One thing in the US that I didn't quite appreciate before was a constant supply of products and stable prices. I knew that a gallon of milk would cost me $3 at Safeway today, tomorrow, and next month. In Uganda, what's available now may not be available later tonight.

This concept directly plays into personal finances among local Ugandans and why there isn't a strong culture of savings here, and elsewhere in Africa, and impulse buying is so prevalent. For example, when I want to buy a beer, one of four situations can occur:

1. The store might be out of beer,
2. The beer might not be cold (because of power outtages, etc.),
3. The beer might cost more (because of transport increases and other reasons),
4. The beer will be cold, cost the same, and be available.

It's a 25% chance that tomorrow I'll pay the same price for the same product. So, as a good consumer who knows his products and has particular tastes, I'd bet in favour of my odds and get another cold one right now.