The petrol price is mainly determined by three factors, fuel taxes, the strength of the Rand to the Dollar and the price of Brent crude oil. The price of Brent crude oil (currently at $73 a barrel) is determined by OPEC (Organisation of Petroleum Exporting Countries). OPEC consists of 15 nations, seven of which are African countries, and (according to Wikipedia) they account for about 44% of global oil production and 81.5% of the worlds proven oil reserves.
We have long established the fact that our economy is in a bad state so while we wait for the ANC to successfully implement one of their many economic growth plans, what they can do in the meantime is suspend all fuel levies as suggested by the IFP (Inkatha Freedom Party).
The current cost of 95 Octane unleaded is R16.02 per litre inland and R15.43 in coastal areas. The fuel levy is R3.37 per litre and another R1.93 goes to the national Road Accident Fund. Combined, this amounts to R5.30 per litre which can be temporarily suspended bringing the petrol price down to R10.72 per litre inland and R10.13 coastal. This would mean that the government and the RAF will not make any money from petrol consumption. Seen as the RAF apparently spends R500 000.00 per month on renting 300 chairs (I’m struggling to understand how that’s justifiable) and that we already pay way too much in taxes anyway, I see no problem with this solution. Perhaps this could also put pressure on the government to improve our economy so that they may continue to benefit from fuel levies.
On the bright side, Libya (a member of OPEC) brought down the oil price by 6.9% on Wednesday 13 July 2018 when it’s National Oil Corporation (NOC) announced that it would be reopening four export terminals thus increasing its current supply capacity. Let us hope that we will see this drop in Brent crude reflected in the petrol price.
One might argue that compared to the rest of the world, our fuel price is fair. However, we’re not exactly an economically advanced country and our tax money is being wasted most of the time so I don’t see the benefits of paying R3.37 per litre in levies. What is also baffling is how Botswana pays way less for their petrol which is imported from South Africa.
The only option the government has right now is to suspend or reduce fuel levies. If Nhlanhla Nene and Jeff Radebe are at all bothered by the situation, they will see to it that this is done.