Why does the government set maximum prices on fuel

On this page, we will discuss why the government set maximum prices on fuel. From time to time, the government regulates the prices of some goods and services such as petrol and diesel. The government may set the minimum, as well as the maximum prices on fuel.

Reasons for the Government to regulate Fuel Prices

Below are some reasons why the government may choose to set a maximum price on fuel:

  1. By setting up a maximum price on fuel, the government is able to make some goods less expensive to the end-users. Example: food.
  2. Make some goods more expensive in order to benefit certain sectors.
  3. To stabilise prices by preventing rapid fluctuations in the price of food

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