Petrol prices

Tuesday 21 August 2018: Jeff Radebe (centre) talks about the fuel price crisis. (SAGovNews / Twitter)

Petrol prices explained: This is why fuel costs are soaring in South Africa

Minister for Energy Jeff Radebe has explained why petrol prices have been surging. But does he have any solutions?

Petrol prices

Tuesday 21 August 2018: Jeff Radebe (centre) talks about the fuel price crisis. (SAGovNews / Twitter)

For the fourth month in a row, South Africans are paying a record amount at the pumps. Petrol prices have broken through the R16 a litre mark, and a lot of us are unhappy.

Civil action and various protests have been used as a vehicle to express the nation’s dismay, and the government’s silence has been deafening. Only on Tuesday did Minister of Energy Jeff Radebe attempt to explain the current oil crisis, but he began with an apology.

A Parliamentary Portfolio Committee was meant to meet with Radebe last week, only for the minister to completely miss the event. He finally explained his no-show during this 10:00 briefing, saying that an ANC staffer wrongly informed him it had been postponed.

Formalities aside, Radebe, Deputy Minister of Energy Thembi Majola, and Department of Energy Director-General Tseliso Maqubela set about explaining the factors behind the surge in petrol prices.

Where does South Africa get its oil from?

Almost a majority of oil that makes its way onto Mzansi’s shores comes from Saudi Arabia. The Gulf State is responsible for 49% of South Africa’s imports, whereas Nigeria (24%) and Angola (20%) are also big players in our fuel industry.

Why don’t we use our own supply?

Tseliso Maqubela states that current demand has vastly overwhelmed domestic supply. He says our refineries simply “don’t have the capacity” to provide the amount of fuel required to keep South Africa going.

Why are petrol prices so high in South Africa?

Radebe began wheeling out the reasons – or excuses, depending on how cynical you are – for the hikes.

First of all, he was keen to stress that the price of oil has risen from $30 a barrel up to $80 a barrel since 2016, leaving his department in a very difficult position.

A decision by the Organization for Petroleum Exporting Countries (OPEC) and key non-OPEC countries to cut 2% of the global oil production to support higher oil prices has hit Mzansi where it hurts:

What are other factors behind the hikes?

Secondly, it would seem like external political upheaval has taken its toll on SA. Radebe highlighted that Libya produced 1.5 million barrels of oil a day before the regime collapsed in 2011. That number is now almost at a third of what it used to be.

Venezuela’s current crisis also got a mention. They are a member of OPEC, but the oil industry has all but collapsed in the South American state. Generally speaking, production is down and the cost has gone up.

These reasons, however, don’t really account for the sudden spike that coincided with Cyril Ramaphosa’s much-maligned VAT increase. The Shadow Minister of Energy Gavin Hunt also raised an issue with the government-issued fuel levy.

It currently stands at R5.30, accounting for roughly 33% of each litre of petrol. Hunt expressed his disappointment with the ANC, who believes they have no reason not to reduce the price:

“Energy Department officials said today that the fuel levy is not part of the remit of the fuel price technical team set up by Treasury and the Department of Energy. And so we are left wondering exactly what they are discussing and whether there is any real commitment to reduce the price of petrol.”

What will the government do to lower fuel prices?

At the moment, they are talking the talk without walking the walk. Radebe claims that SA has been intensifying fuel-saving measures, as well as leading engagements with fuel producing countries to explain the impact the fuel prices are having on developing countries.

However, there are no signs of a concrete plan in place to end the misery of motorists across the country. With the AA predicting yet another rise in petrol prices for August, it seems the wait for a solution will drag on.