Two petrol price changes proposed for South Africa

Trade union Solidarity has sent letters to energy minister Gwede Mantashe and finance minister Enoch Godongwana, calling for changes to South Africa’s record-high petrol price.

The union is calling for the deregulation of fuel prices, which will ease financial pressure on consumers and businesses. The group has also called for a reduced fuel levy, currently included in the retail fuel price.

“South Africans currently find themselves in the precarious position that many people have not fully recovered financially from the devastation caused by the Covid-19 pandemic,” said Theuns du Buisson, economic researcher at Solidarity.

“It is in light of this that we call on the Department of Mineral Resources and Energy to urgently deregulate all fuel prices at both wholesale and retail levels. We also appeal to the Department of Finance to reduce the fuel levy.”

Solidarity said that fuel lies at the heart of any economy. Therefore it is of the utmost importance that prices should be as low as possible, or at least not kept artificially high, to enable citizens to get to work and enable goods and services to find their way to citizens.

“The pandemic and years of sluggish economic growth are a reality while the cost of living is still rising. One such cost is the price of fuel, which is currently at its highest level in South Africa’s history. According to the latest CPI figures from Statistics South Africa, fuel is currently 19.9% more expensive than it was a year ago in September 2020.

“Since then, we have had massive price increases, and specifically the increase of more than R1 per litre on each fuel type at the beginning of November this year,” Du Buisson said.

Deregulation 

Solidarity said that when the retail price of diesel was deregulated, it saw a significant price drop almost immediately.

Currently, petrol is about 20c more expensive than diesel when it is imported at R9.37 per litre. However, the price difference is often more than R2 per litre at the retail level, with R16,66 being the lowest diesel price Solidarity could trace – a difference of R2.88 per litre, the group said.

“As the diesel price indicates and is proof of, deregulation is in the public interest. We, therefore, call on the Minister of Mineral Resources to deregulate the price of petrol at both wholesale and retail level and to also deregulate the price of diesel at the wholesale level,” Du Buisson said.

“Today, our country counts among a minority of countries whose governments are exercising the current degree of artificial price manipulation. To exacerbate matters, our government insists on keeping the price of certain fuels artificially high while almost all other governments are intervening to keep the price of fuel lower.”

This approach by the government is to the detriment of all South Africans who have yet to recover from one of the most significant economic downturns in world history, it said.

December hike likely

Transaction Capital, the owner of SA Taxi, has warned that another petrol price hike is on the cards for South Africa in December, on the back of a weakening rand and high international oil prices.

In its financial results published on Tuesday (16 November), the group warned that this will likely have several knock-on effects, including rising taxi fare prices and other increased transportation costs.

Projections from FNB paint a bleak picture for the coming months, with Chantal Marx, head of Investment Research at FNB Wealth and Investments, projecting double-digit inflation for fuel prices to persist until at least March 2022.

The primary pressure on local fuel prices has been a sharp increase in Brent crude oil prices over the past few months. These prices were driven up by natural gas shortages in Europe and Asia just as the northern hemisphere entered winter. Marx said she sees the current R19.54 price for 95 unleaded as the peak, but risks are to the upside.

The Central Energy Fund is expected to release its mid-month petrol forecasts for South Africa later this week.


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Two petrol price changes proposed for South Africa