High Fuel Prices Squeeze African Consumers, Strand Truckers and Snarl Flights

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In Cameroon, thousands of truckers spend weeks stranded at highways and border crossings due to lack of diesel. In Kenya, drivers are lining up overnight to fill their tanks. In Nigeria, airlines have threatened to ground all domestic flights as they scramble for expensive jet fuel, the Wall Street Journal reported. Across Africa, surging fuel prices are straining businesses from bakeries to airlines and adding pressure on consumers already burdened by spiraling food costs and the economic disruptions caused by the continuing Covid-19 pandemic. While Subsaharan Africa hosts an estimated 125 billion barrels of crude-oil reserves, almost all oil produced there is exported and then imported again as refined fuel at much higher prices. That has made African countries especially vulnerable to the sharp increase in global fuel prices triggered by Russia’s war against Ukraine. They also often find themselves at the back of the line for fuel imports, with refineries giving priority to larger markets in developed countries in times of high demand. In more developed countries, most consumer goods are produced and sold by large companies that often try to absorb some fluctuations in input costs. But the predominance of small-scale informal traders in many African economies means that fuel-price increases are typically passed on to consumers more quickly, said Sebastian Spio-Garbrah, chief analyst at risk consulting firm DaMina Advisors. (Subscription required.) Read more.