| dc.description.abstract | Petroleum products are a key source of commercial energy in Kenya. The
economic impacts offi rst and second oil shocks of the 1970s and current
volatile crude oil prices have pushed supply vulnerability to the top of
energy policy agenda. Kenya ought to continuously review the energy
policy contained in Sessional Paper No. 4 of 2004 as well as implement
energy plans and investments to obviate her potential vulnerability to
oil supply disruption and oil price volatility. The problem of sustained
higher global oil prices may undermine Kenya's economic growth and
weaken progress towards achievement of Vision 2030. Clearly then, it is
imperative to understand Kenya's energy supply constraints, especially
the level of oil supply vulnerability.
The study uses Shannon-Weiner index, Hirschmann-Herfindahl
index and econometric modelling to assess Kenya's level of oil supply
dependence, vulnerability and energy intensity, using secondary
data sources. Two results emerged: First, Kenya is vulnerable to
unanticipated supply interruption and international oil price volatility.
Such supply vulnerability has knock-on effects for the Great Lakes
region because the regional economy (consisting of Uganda, Northern
Tanzania, Rwanda, Burundi, Eastern Democratic Republic of Congo
and Southern Sudan) relies on petroleum infrastructure in Kenya for
supply of refined products. Second, the econometric model shows that oil
intensity rises positively and significantly with increases in per capita
vehicle ownership and urbanization rate.
Several policy recommendations are drawn from this study such as the
need to manage national demand for petroleum products by tapping
into potentials for energy efficiency savings in various end-use sectors;
the need to hedge external supply shocks by diversifying crude oil
supply sources within Gulf producing countries by reducing the market
share commanded by a single country; fast tracking implementation
of essential stockpiling systems of strategic petroleum reserve; and
exploiting alternative energy opportunities in Kenya. | en |
