Coordinating with the Petrol Sector to Enhance Early Warning

For far too long humanitarian actors and coordination mechanisms have witnessed sharp price variations of core commodities without the capacity to forecast them. While to date some Cash and Vouchers Working Groups (e.g., Afghanistan) establish mechanisms to continue monitoring and adapt transfer values in a timely manner, information is still made available weeks after the shock occurs. This analysis aims to provide them with one possible approach to forecasting such sharp shocks, allowing them a margin of few days to prepare and adapt. Ultimately, having systems in place to quickly amend transfer values is aimed to preserve beneficiaries’ purchasing power in the local markets and the broader markets’ functionality.

Through case studies and a global overlook, this paper investigates the interlink between petrol and food costs, which although part of the common knowledge has been rarely explored thoroughly within the humanitarian sector, and it calls for cooperation with the petrol companies operating in crisis-affected countries for better monitoring and forecasting.

Furthermore, it is acknowledged that adapting transfer values is not an easy task for humanitarian actors, but through early warning mechanisms there could be sufficient buy in at Cash Working Groups’ level to raise concerns to donors, or more easily there could be ground to discuss and adopt a temporary top-up approach, until the prices stabilize.

Case studies hereby presented cover Kenya, Lebanon, Afghanistan, Cameroon, and Nigeria.

Due to a combination of policy tightening, worsening financial conditions, and sanctions, not only was a sharp increase in oil prices witnessed in 2022, but significant disruption to Russia’s exports occurred in the short term because of the price cap and Russia’s reaction to it. Global food and fuel price shocks linked to the war in Ukraine are set to last until at least the end of 2024 and raise the risk of “stagflation”. Thus, according to recent data on petrol prices forecast globally, should inflation on food commodities continue following similar trends, it is possible to assume that the countries with an expected rise on petrol prices should be under close watch together with those countries currently facing large-scale humanitarian crises with no petrol-related data available.

While this preliminary study has methodological limitations dictated by data availability, it remains clear that a link between the petrol and food prices exists, and it could open up discussions around an unprecedented cooperation amongst the two sectors to enhance early warning and Anticipatory Action implementation at country level. Thus, humanitarian actors operating in these countries are recommended to:

• Start engaging with companies operating in the petrol sector working in the country,
• monitor petrol price variations regularly, depending on data available, and
• be prepared to adjust transfer values of the Food Basket or provide top-ups accordingly.