World Oil Prices Drop Yet Pump Prices Have Not

If you have been following the news or interested in the oil sector globally, you must know that the world crude oil prices has reached at below $70 per barrel from $115 per barrel back in June! That is a 40% price drop.

I am not going to go into why the price has dropped or been dropping (there are a number of articles all over the Internet with details) To save you time on Google Search, here is an article Why the oil price is falling – the Economist,  you should read it!

Over the last couple of days, I have seen tweets and interacted with many people who are asking the same question;
Why are the Pump prices of fuel NOT reducing, yet the world oil price has reduced?

Interestingly, this in not only being asked by people in Uganda but different parts of the world.

Over weekend, I had a long and interesting debate with Gilbert Buhirwa, Allan Ssenyonga, Santine and, Allan Kasujja and Nkem Ifejika chipped in too!

I am not going to post the whole conversation but I am going to answer your question on why Fuel Pump prices have not dropped.

Local fuel pump prices are not ONLY determined by the global crude oil price! As further confirmed by the Managing Director of Vivo Energy Uganda, the Shell licensee in the Uganda, Mr. Hans Paulsen.

The world oil prices (Platts) are one key determinant, as well as the cost of bringing the goods into the country, the strength of the Uganda Shilling, among others. You have noticed by now that our prices at Shell service stations have decreased.

The other factors that determine the local pump price include the dollar rate compared to Uganda Shillings. In May/June when a barrel of crude oil was $115, in Uganda, the dollar was about 2518Ugx. In December now, at $70 a barrel, the Uganda Shilling has dropped value, with the dollar at 2780Ugx. You need to note that these fuel companies make their purchases/logistics in US Dollars and sell the fuel in Uganda Shillings. Depreciation of the shilling will definitely affect the pump price.

These fuel companies in Uganda (not just Uganda) make bulk purchases, the fuel that is being sold right now on the local market, was probably purchased more than 3-5 months ago!

Here is what Vivo Energy Uganda’s Hans Paulsen, had to say about this;

Uganda is a landlocked country and most of the importation is done from the middle east via Kenya which means that at any specific time we have two to three months of stock in the logistic chain.

Something Allan Kasujja mentioned too!

Rob Young (robyounguk), is a Business reporter and presenter on BBC World Service radio.

A drop in the world crude oil price will not affect the stocks that were bought before the price drop.

All in all, yes we shall experience the benefits of the crude oil price drop BUT it will not be immediate.

You may ask, why then is a disruption in Kenya leads to immediate price hike?!

Well, let me ask you this, if you were doing supply business and there is trouble along your supply route affecting the delivery of your next stock, what would you do with your current stock?
1. Continue selling like nothing has happened?
2. Workout measure to ensure your business wont fail as you sort out the issue
3. Stop selling and keep stock until your supply is restored

Depending on your choice of answer above, you can tell me if we need to have this debate too!

If you think I am wrong or missed something, I would love to hear from you… use the comments below.

Job Opennings

Part of the projects I am working on is running a digital agency, where we provide services like Web Service (these include Website development, Website hosting, Website Auditing, Search Engine Optimization, Online Advertising…), Social Media Service (Social Monitoring, Social media training and outsourcing), Business Analysis and Digital branding.

We have 3 employment spots available, details below;

Business Development Manager

If you live and breath business development. If you are the type that believes in working for your meal.
Experience is an added advantage. We believe in delivery

Get in touch.

Web Developer

Are you creative? Do you have experience with Joomla, WordPress, PHP .. You know the web development coding languages Get in touch. We have awesome sites to build.
Keyword = CREATIVE

Office Administrator [INTERN]

If you are a fast learner, EXTREMELY organised and with good time management skills.
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Academic qualification are not very relevant, as long as you can write, speak and read good English.

Get in touch, we discuss the details. Email or Skype me on colindnl or Send me a tweet! @cmugume

What Shell Uganda got wrong with Fuel Save

Earlier tonight I saw a tweet from a friend @pkahill who was excited about finding 32 coupons of Shell Fuel Save.

Those that do not know what Shell Fuel Save is, in summary; It is a Shell Uganda (@shellProductsUg) promotion where for every 20,000Ugx worth of fuel you buy, you get a coupon with a code on it which you SMS to 6777 and stand a chance of winning free fuel for a year.

Fuel Save

It is an awesome promotion really. I too took part in it – yeah, I stopped.

Here is why;  I have been using Shell fuel for a while so a chance at winning free fuel while doing what I have been doing all this time seemed awesome. I started asking for my coupons  every time I refueled. I did send the codes to 6777 too.. till I got bored.

First of all there is no confirmation that your code has been received.  A simple reply SMS saying something like “..your code has been submitted, best of luck!” Would have done a lot here

There was no gamification used at all. You can’t know how well you are doing, what chances you have, or how many coupons you have submitted. The whole process is just boring.

Those that do not know what gamification is;

Gamification is the concept of applying game mechanics and game design techniques to engage and motivate people to achieve their goals. Gamification taps into the basic desires and needs of the users impulses which revolve around the idea of Status and Achievement.

There is no mobile notification (to the people that have submitted codes before) about the winners. Hearing that so and so has won after he/she submitted 10 coupons or one lucky coupon, would go a long way to get me sending more codes. As for the radio advert that say please remember to SMS the code – Waste of resources. A reply SMS would have cost way less than the cost of the radio advert.

There is no mention of the end date of the promotion to create urgency for us to submit the codes to beat the deadline. Even the codes I submitted most of them I submitted them days after I got them – there was no need to rush to send them. I have no idea when the promotion ends or when I will win.

I do believe it was a great promotion but it was poorly executed. I am no marketing or branding expert but I do believe that gamification is something that we all ought to know about it.

For those that are still hopefully (and not yet bored like me), here are a few codes that I had not yet submitted, good luck!


My Experience With a Sore [business] Loser

Sometime last year I met a client online who runs an apartment rental services, tours and travel and an art gallery. He is a very friendly and good guy to work with.
What he wanted was someone to transfer his old three basic static (html/css) sites (which were developed a number of years back to) WordPress.

I have worked with WordPress for a number of years so this was a simple task. I put my guys to the task and all was going well until we started getting issues with his hosting company.

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