...Well, the parliament has passed this bill and Baba Jimmy as usual will take time as he listens to hapa na pale to decide whether to append his signature or not. One argument I have read in the DN is that traders will move to selling other commodities that have no price controls and this will create shortage of the controlled commodities...na mimi nauliza, kwa lexample, for those who sell fuel...will they start sellling water!!! Shenzi argument!!!!

The government need to regulate fuel and electricity and everything else will fall in place..............

Does SA regulate fuel??

@Magigi: petrol dealers will stop selling fuel; sell the stations and do something else with the money.

Anyway; I liked the way Jaindi Kisero summed it: "A foolish idea whose time has passed"

One the biggest problems in Kenya is our short memory. A crook steals our billions. Goes into hibernation; then comes out and bribes us to vote for him again...and we do!

I vividly remember the days when the price of sugar was controlled at Sh4.45 per kg. The local chief would take charge of the selling in the shops that had the commodity.

People would queue for several hours waiting for the chief to finish attacking the chang'aa dens and then come and supervise the selling of sugar.

BTW; the commodity would be delivered to only one shop in my town (Thika) once a month. Other traders wouldn't stock it because the profit margin was too small.

Same thing with cement. Only one shop in the whole town stocked it!

A few shops would get controlled commodities through the back door and sell them at "market" prices. E.g., sugar would be sold at Sh10 per kg; cement Sh100 instead of sh57.85.

And this is where these silly MPs want to take us back to?

Why have a cheap commodity which isn't available?

If I were Kibaki, I would reject that bill in the interest of the survival of the nation.

Still; it is interesting that Kibaki was the one who perfected the price control philosophy when he was minister for finance.

Let's wait to see whether he has changed.

A very retrogressive move by Parliament.

Price controls can take the form of

Maximum Prices – Price can’t rise above a certain level. This can reduce prices below the market equilibrium price. The advantage is that it may lead to lower prices for consumers.


The disadvantage is that it will lead to lower supply. There will also be a shortage, demand will exceed supply; this leads to waiting lists and the emergence of black markets as people try to overcome the shortage of the good and pay well above market price.

Minimum Prices

Minimum prices are used to give producers a higher income. They are used to increase the income of farmers producing goods.



The disadvantage of Minimum Prices

Higher prices for consumers
Higher tariffs necessary on imports
May encourage oversupply and inefficient.
Conclusion

Generally price controls distort the working of the market and lead to over supply or shortage. They can exacerbate problems rather than solve them. Nevertheless there may be occasions when price controls can help for example, with highly volatile agricultural prices


http://www.economicshelp...tages-and-disadvantages[color=brown]/


Not good for the Economy[/color]

This is a silly populist law that will never work. I would not waste time agonizing about it.

Why can't they adress the real problem.

Corruption, maize scandals etc.

Why does NOCK not sell its fuel at the 'correct price'

Having said that, the MP's move will make the govt think hard on ways to address the perrenial issues around essential goods in Kenya, it is not fair that the price of Unga should move from 60 to 120 simply because someone in carhoots with govt officials are hoarding the commodity and creating unnecessary supply bottlenecks.

May be the MP's should start supplying these essential goods, since with this bill they are suggesting that they understand these businesses more than the businessmen.

@ statmeister... You are right , this may just have completely trashed the idea of a commodity futures market. Real shame. Only Kibaki can save us now. Lets hope he has a few good advisors. I doubt Kinyua is for this. He is a sharp guy.

Mukiha,BTimer,Mpenzi hata bei ya Mafuta?

India has fuel price control, and is doing better economically than we ever will.

Malaysia had fuel price control until 2008, and they are also better off than we are.