The Major Energy Marketers Association of Nigeria has explained why petrol prices in the country tend to rise quickly but fall more slowly, citing cost recovery pressures, existing stock positions and market volatility.

Speaking at a MEMAN webinar on Tuesday, the association’s Chairman, Hubb Stokman, said the trend is not unique to Nigeria but reflects how markets react to sharp swings in global oil prices.

He added that when prices surge suddenly, marketers must adjust pump prices promptly to stay afloat.

Stokman acknowledged that fuel prices tend to rise more quickly than they fall.

He said prices often rise quickly because marketers need to raise enough working capital to buy the next supply of fuel, adding that this is a common pattern in many businesses.

“But I think, actually, this is not unusual. Maybe fuel is one of the most visible products that does it. But if you go to other fast-moving consumer goods, it’s almost the same. And sometimes people forget that what happens when prices go up, especially rapidly, is that the dealers need to quickly generate the working capital to buy the next truck. And you only do that by reflecting the price increases at the pump,” he stated.

He added that marketers who do not adjust prices promptly risk being unable to restock, potentially leading to supply disruptions.

However, he noted that price reductions tend to be slower, as marketers must first sell off existing inventory acquired at higher costs.

“And then when it eases off, what you try to do also is not to go as quickly down again, necessarily, but you might sometimes ease it down a little bit, especially if you’ve got the high stakes to create what they call a ‘parachute’,” he said.