Image Source: The Citizen
Local – OUTA CEO, Wayne Duvenage, believes that the government is doing all it can to shield consumers from the latest round of fuel price increases, by reducing the fuel levy to soften the blow of what forecasters say could be a hike of up to R2 per litre in the coming days.
The increase comes as South Africans already contend with a rising cost of living, with fuel price movements feeding directly into food, transport, and everyday necessities.
Duvenage said the bulk of the pressure stems from international factors, particularly the ongoing conflict in the Middle East and its effect on global oil supply. A rand that has weakened against major currencies was compounding the situation, adding roughly R1 to the overall increase.
“It’s largely 80% of it due to the international tensions and the impact that the Middle East war is having on the supply of oil to the markets.”
Diesel Bears the Brunt
Diesel users were expected to feel the sharpest pain. Because diesel is unregulated in South Africa, individual petrol stations have discretion over their prices. More critically, diesel underpins the transportation of goods across the economy, meaning its price feeds directly into inflation in a way that petrol does not.
The National Treasury announced an extension of the fuel levy relief, a mechanism previously deployed during the Covid-19 pandemic. Without the relief, Duvenage said motorists would be paying considerably more at the pumps than the already steep prices that were then anticipated.
“The price of petrol would be three rand higher per litre. It’s as simple as that.”
Could the Government Do More?
Duvenage acknowledged the limited room to manoeuvre within the existing fuel price structure. Levies tied to the Road Accident Fund and various supply chain costs could not easily be trimmed. He did, however, flag one area that deserved greater scrutiny, South Africa’s oil reserves.
He pointed out that the country held only about two weeks’ worth of reserves at current consumption rates, a figure he suggested was both insufficient and poorly communicated to the public.
“One thing they can do, which is what we haven’t seen much transparency on, is our oil reserves. We have about two weeks of oil reserves at our current consumption rate.”
