Speaking to IOL, emeritus professor of international law at Unisa André Thomashausen commented on the possibility of prices drastically spiking.
“In a worst-case scenario, South Africa could expect liquid fuel prices to increase to about R40 per litre. As Eskom energy production depends much on imported diesel, electricity prices could increase by up to 40%.”
Thomashausen explains that these factors could have a devastating effect on the nation’s finances.
“This could have a devastating effect on all the parameters of the current budget and sink South Africa’s hopes for a post-Covid economic recovery,”
In line with this, Agri Enterprises economist Shané Rudolph says that a sharp spike in oil prices will have an effect on food prices. This could see food prices significantly rising.
In an example, fuel costs account for 13% of grain production expenses and about 80% of SA’s grain is transported via road. With fertiliser prices also recently spiking by around 70% due to Russia being one of the world’s largest exporters.
Should fuel prices rise any more than the already high point they are currently at, it would put SA at major disadvantage.
With the cost of petrol inland already sitting at over R21 per litre, the Organisation Undoing Tax Abuse says the rise of crude oil cost isn’t the only reason SA is digging deep to cover fuel costs.
OUTA explains that combined levies on motorists have climbed by 126% over the past decade and added to the cost of fuel.
Thankfully, the government has announced that it would not be increasing levies in the 2022/23 financial year. Finance minister Enoch Godongwana confirmed that he is in talks with energy minister Gwede Mantashe.
“The intention is to review the fuel price and its structure. The intention is to make sure that we can have a petrol price which is competitive with this economy.”