Abstract
To assess the effectiveness of fuel pricing as a means of controlling fuel sales in Kenya, time series analyses were carried out to quantify the effect that changes in price have had on sales of petrol and light diesel fuel between 1972 and 1981. While sales of both products correlated well with time or GDP, it was found that a GDP-based model gave more consistent results and that price had only a small effect on sales. Short-term price elasticity appeared to be around -0.1 for petrol and close to zero for diesel. The difficulty of measuring long-term price elasticity is discussed. It is concluded that taxing fuel is an effective way of collecting revenue but an ineffective way of controlling fuel sales in the short term.