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Impact of Fuel Shortage on Economy

Introduction

Fuel is a resource used for producing energy and using it to allow people to produce and

consume. It includes coal, oil, and natural gas, among others. Fuel shortage refers to the general

unavailability or inadequate fuel products in the market. Fuel shortage occurs due to industrial

action, panic buying, public protest, scarcity of supply, technical problems among others.

Fuel Shortage Impacts

Financial losses for businesses and the economy. This includes business which rely on

fuel for their operations. Example Welding, 'Matatu' public vehicles, companies, etc. They suffer

a huge loss due to high cost of production associated with inadequate fuel supply. A company,

for example which rely on coal which is in low supply in the economy has to find other fuel

alternatives which might be expensive despite the available coal prices being extremely high. 

Inability to provide essential services. These includes services such as hospitals and other

healthcare, utilities such as electricity and water supply, law enforcement and firefighting, and

food services.Hike in fuel prices due to shortage leads to inflation and thereby increasing the

standard of living of the common citizens. This is due to increase in demand for fuel products

against the supply of the commodity in the market.

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Lengthy return to normal supply levels. It takes a lot of time to reverse the situation to

normalcy. It may take few weeks to make the commodity available again in the market. This

leads to everything into standstill until the normal situation is restored.

Public anger, confusion, and frustration over queues at service stations and the apparent

inability of government to solve the problem. It is also caused by increase in prices of fuel prices

due to low supply of fuel products in the market.

Severe overloading of all forms of public transportation services in many localities. Due

to few vehicles operating, people tend to scramble for space while doing their daily duties

especially going to job. Substantial damage to important sectors of the economy (e.g., travel and

tourist industries). The most important economic feature of activities related to the tourism sector

is that they contribute to three high-priority goals of developing countries: the generation of

income, employment, and foreign-exchange earnings. In this respect, the tourism sector can play

an important role as a driving force of economic development. The impact this industry can have

in the different stages of economic development depends on the specific characteristics of each

country. Given the complexity of tourism consumption, its economic impact is felt widely in

other production sectors, contributing in each case toward achieving the aims of accelerated

development

Conclusion

Fuel shortage affects all sectors of the economy. These include transport, health,

education, agriculture, tourism etc making them standstill. One sector affects the other thereby

leading to general inflation in the economy. Fuel shortage leads to fuel crisis which results to
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instability in the economy of a country, paralyzing all economic activities. Therefore, people

tend to use other sources of energy such as electricity to cope up with the situation.