SAM'S SENSE: Between barrels and barrels

Three weeks of retaliatory attacks that have hit the Middle East affecting global trade channels. At least 20 per cent of the world’s crude oil passes through the waterway into the open ocean.

In that short period, countries have been busy strategically negotiating with allies such that India, China, Russia, Iraq and Pakistan have been granted leave that their commercial ships will be allowed to pass through the chokepoint.

Back in Nairobi, we have been watching and listening to assurances from the government. As late as Wednesday, the 25th of March, the government is confident that there is no cause for alarm as to fuel shortage.

Energy Cabinet Secretary Opiyo Wandayi told reporters that as of Wednesday, the country had at least 102 million litres of super petrol in stock. He even issued warnings to oil marketing companies and retailers who dare to hoard the crucial commodity or even increase the price on account of artificial shortage.

All good with the assurance. But what has the government been doing?

Less than 24 hours after Opiyo’s statement, President William Ruto acknowledged the reality of the challenge posed by the situation at the Strait of Hormuz. So, what changed?

You see, the government exists so that it can plan for public goods and services. So that it can strategically foresee challenges and threats and find ways to take action to protect the citizenry. And while assurances and warnings are important, it is more beneficial to face reality.

Looking at the numbers, 102 million litres of oil are only sufficient to cover up to two and a half weeks of super petrol demand. To tell Kenyans that there is no reason to worry when the assurance is only worth two weeks is to burry head in the sand.

For a government that has access to all manner of data, local and foreign intelligence, it would be expected that the ministry of energy and indeed the government would be more strategic in thinking and action.

Now, based on news and information received, Kenyans would be expected to be concerned and likely to engage in panic-buying of the product. And when such happens, then the 102 million litres is depleted sooner than expected.

And that would create a bigger crisis. This is how.

Three major oil marketing companies, Vivo, Rubis and Total Energies, control 50 per cent of the oil distributed in the country. They have outlets across the country. Another 143 retailers control the balance of oil distribution.

Among this is a significant number of more than one hundred retailers who distribute just about 15 per cent of oil. It adds up to over 915 million litres of oil annually. They are in the remotest of towns and villages. What you may call last-mile distribution. Meaning they probably serve a bigger population than the top three.

They are the outlets you find in the dark village towns where electricity goes off during the day and sometimes in the night, leaving businesses to depend on generators fueled with the same products from the little-known outlets.

When fuel shortage is rumoured, residents and businesspeople here panic-buy. And since the outlets are only allocated a small fraction of the imported products, they begin to shut down. Forced to buy fuel from other retailers. The price must go up with or without threats. Because this is the reality of business.

A strategically thinking leadership would foresee these and other realities and plan ahead. Should the G-to-G arrangement be at the risk of not functioning given the challenges in the Middle East, the government would be expected to come up with interventions that secure the interests of the larger population – the consumers of the 15 per cent fuel from more than 100 oil marketing companies. A duty of care that protects the people and businesses.

To issue denials, threats and condemnation while surrendering the responsibility of strategic thinking to a higher authority is to fail in duty. And then the higher authority comes out to admit there are challenges, and that the energy ministry is working hard to find alternatives. And Kenyans are expected to believe that. Do they?