Fuel hikes a stretch too far for stressed consumers: experts

The skyrocketing fuel price is a serious threat to stability in a society already punch-drunk from economic hardships and Covid-19, according to consumer specialist Ina Wilken, the former chairperson of the SA Consumer Union.

The government on Monday announced another fuel price hike, pushing the cost of petrol to more than R20/litre, for the first time, from December 1.

Both grades of petrol (93 and 95) will increase by 81c to bring the retail price of 95 unleaded to R20.35/l and 93 unleaded to 20.13/l in Gauteng. These are new record highs in a year that has seen a series of fuel price hikes, and it will now cost R1,017.50 to fill a 50-litre tank compared to R743 in January, when a litre of 95 unleaded cost R14.86.

The wholesale price of diesel rises 73c/l for high-sulphur fuel and 75c/l for low-sulphur diesel, while illuminating paraffin rises 42.20c/l.

A litre of diesel will  cost R17.92 (high-sulphur) and R17.98 (low-sulphur).

The recent increases — half a dozen so far this year — had pushed many cash-strapped consumers to breaking point, Wilken said during a webinar on Monday, attended by logistics industry stakeholders.

The fuel price increases have created a knock-on effect throughout the economy, notably in public transport and consumer goods.

“Consumers just can’t afford it any more,” Wilken said in the webinar, entitled SA’s Crippling Fuel Hikes, hosted by Bigfoot Express Freight. “Consumers have had enough, I can promise you that. That is where looting starts. Before it gets out of hand the government must come to the fore and tell us what they are going to do,” Wilken said.

The result of the recent local government election, with a swing away from the ruling party in many metro areas, was a symptom of dissatisfaction over “bread and butter” issues, such as the rising cost of living, Wilken said.

Government intervention was urgently needed to soften the blow of fuel price hikes, which was partly the result of levies and taxes. About 40% of the pump rice was determined by levies and taxes, according to industry experts who spoke at Monday’s webinar.

Said Wilken: “There are so many things that government should start looking at if (it) is at all concerned about consumers at ground level. Consumers can’t even pay their debt.

“It is time for government to respect consumers. They should realise that if it wasn’t for consumers they wouldn’t be in the (government) positions. We pay their salaries and taxes.”

Mohil Bandulal, portfolio manager and business unit head at Sasfin Securities, said the government was partly hostage to the soaring price of international crude.

However, there was still room to manoeuvre locally, Bandulal said.

“There is a vast amount of flexibility once it is on our shores, because that’s when the taxes kick in,” he said, adding that there was a perception that government used fuel as a means of bolstering the fiscus.

Bandulal said if left unchecked the soaring fuel price would continue to increase the price of basic goods and push many deeper into poverty while aggravating the inflationary cycle.

“So many people are living at the edge in a country like ours. It becomes more and more expensive for them to live their normal daily lives,” he said.

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