The Remarkable Change in Fuel Price of Kabul Market

       As you know, the fuel prices in major cities including Kabul has been experiencing upward trend in winters. Although I could not get the price data for this winter period, the following Table summarize the change in real and nominal prices of petrol, diesel and liquid gas between May and November 2018 in Kabul city. The data show that during this short period (before winter), the real price of petrol, diesel and liquid gas has substantially increased by 16%, 25% and 33%, respectively. This is much lesser than the 7% depreciation of Afghanis against US dollar, which is commonly quoted as reason for higher fuel prices in the country. 

      I wanted to turn the attention of relevant authorities to this problem, which is known to everyone but no one take the responsibility to correct fuel market. The lobbying and pressures 
      If we analyze the difference between FoB (export) and CIF (imported) prices of fuel, the profit margin of traders is very high and unfair. The fuel market concentration lead to asymmetric price transmission. That is, prices are increased very fast but decrease in prices is very slow. In other words, the high prices of fuel are sticky. 

         It is the duty of government to correct this market failure, and fuel importers should also realize their ethical and religious obligations to the poor Afghan people by avoiding huge profit margins. With higher fuel prices during winters, many poor households cannot have the opportunity to warm their houses and cook food. Also, they have to pay high rent of cars. This is also happen in a situation where the income of common Afghans does not increase but reduced due to higher unemployment or underemployment rates.