DURBAN - A PETITION to #ReviewTheFuel price model, which was started by the AA, is gaining momentum after another hefty fuel price hike this week.
The Department of Mineral Resources and Energy announced that both grades of petrol had increased by 53 cents a litre, while diesel 0.05% increased by 80 cents a litre and diesel 0.005% increased by 79 cents a litre. The price of illuminating paraffin went up by 101 cents a litre.
Layton Beard, AA spokesperson, said that “ominous oil price data” was the main cause of the increased fuel prices.
“The February increases will push fuel prices in South Africa close to the record highs experienced in December 2021. The large increase in illuminating paraffin in particular will hit poor people hard, as many rely on this fuel for lighting, heating and cooking.”
Beard said that the increase in fuel could also be attributed to rapid strengthening of benchmark crude oil prices to nearly $90 (R1 300) a barrel.
“The last time Brent Crude touched current levels was in October 2014, more than seven years ago. A combination of factors is pushing oil higher, not least the imbalance between supply and demand as the lowerthan-expected economic impact of the Omicron Covid-19 variant pushes economic activity higher, and crude production lags.
“In addition, there are political jitters around Ukraine, which could see a switch to increased oil use throughout the EU if Russia restricts natural gas output in response to sanctions threatened by the US and UK.”
Beard said its petition to #ReviewTheFuel is gaining momentum and close on 25 000 people have already signed it.
The petition calls on government to initiate a review of all the components of the fuel price, and to conduct an audit of all existing elements to determine if they are still applicable and correct.
“Our call is for the Minister of Finance to announce such a review in his Budget Speech in Parliament on February 23 as a first step towards mitigating rising fuel costs effectively for the benefit of all South Africans.”
Kevin Mileham, DA spokesperson on Mineral Resources and Energy, said the party had previously written to the Minister of Mineral Resources and Energy, Gwede Mantashe, requesting a review of the fuel pricing model.
“The minister has yet to respond to our letters and statements regarding our suggestion to consult with major sector stakeholders and develop a new fuel pricing model that recognises the impact of fuel prices on our economy (including high taxes, and consumer and producer inflation).”
Mileham said this week’s price hike would put tremendous strain on the poorest and most vulnerable in South Africa.
“With budgets already slashed to the bone after two years of the ANC government’s economic mismanagement of the Covid-19 pandemic, they simply cannot afford the resultant increase in food and transport that the fuel price hike will bring.”
Mike Schüssler, an economist at Economists.co.za, urged caution when speaking about a review of the fuel price.
“We have to be careful when looking at the fuel price model, South Africa has already had to borrow R630 billion and to review the fuel price model it’s not going to be easy to give up the R85bn in fuel taxes.”
Schussler added that petrol stations’ net profit is at 9% and that is only 3% above inflation of 6%.
“We have to bear in mind that if we review the fuel price model, then we would have to also look at petrol attendants as we insist on having other people fill fuel into our cars.
“That being said, if we were able to save money on not having petrol attendants, the other thing to think about is that it would increase the unemployment rate.”
THE MERCURY