High volatility in the world prices ofpetroleum has been a characteristic feature of the globaleconomy in the last decade. World petroleum prices increasedfour-fold between 2004 and 2008 and, and following a drop inprices in the second half of 2008, petroleum prices havebeen rising again, and they are several times higher thanthey were two decades ago. Since high and volatility ofprices is likely to be a permanent feature of the globaleconomy for the foreseeable future, they merit areconsideration of the national transport and taxationpolicies that were put in place when fuel prices were notsuch a significant component of trade-related transactionscosts in Sub-Saharan Africa (SSA) countries. Transportpractices that were based on the assumption of low price offuel are not sustainable, and policies neglect fuelefficiency considerations through lowering the fuelconsumption of vehicles measures are no longer sustainable.Efficient and low transport cost is essential to achieveregional economic integration and strengthen Africa'scompetitiveness in external markets. Higher diesel pricesalso impact on the prices of all other goods which usediesel as an intermediate input. The most significant amongthem with implications for the poor in low-income developingcountries is food, on which the poor spend adisproportionately high share of their total householdexpenditures. This report is in three parts in the firstpart, transport fuel prices in the countries of SSA arecompared with those of other regions of the world. Thecomparison is not only in terms of the actual retail pricesbut also, but taking account of per capita incomes and truckrevenues, also in terms of affordability. This Part alsoprovides evidence of the make-up of transport fuel prices inSSA countries, as a first step in assessing how they can bedealt with. The second part provides new evidence of theimpact of these high fuel prices on the export competivenessof a sample of six SSA countries. It also provides a shorterdescription of the results of a study of the impact of fuelprices on logistics costs in Central America, since so farthere have not been any studies of the impact of hightransport fuel prices on logistics and food costs in SSAcountries. The third part deals with the ways in which theimpact of high transport fuel prices can be addressed. Twomain areas of action are described, those that would reducethe retail price of transport fuel and those that wouldincrease fuel efficiency, so they impact of high priceswould be reduced. This section focuses on diesel fuel, asthis is by far the most used by the trucks that transportexport products and are involved in domestic logistics. Thissection concludes with some ideas on what could be done nextto make progress on implementing the most promising ideasfor reducing the impact of high transport fuel prices.
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