Ukraine war blamed for fuel hikes in South Africa, continent
May 31, 2022, 3:48 PM | Updated: Jun 1, 2022, 9:41 am
(AP Photo/Themba Hadebe)
JOHANNESBURG (AP) — South Africans are feeling the bite of fuel price increases as a result of Russia’s war in Ukraine and the rise in the Brent crude oil price.
Neighboring Zimbabwe and other African countries are also grappling with increasing fuel prices.
South Africa, the continent’s most developed economy, saw gas prices go above 24 rand ($1.50) per liter, more than $5.80 per gallon. Diesel prices also went up.
The latest increases make fuel in South Africa about 40% more expensive than a year ago. To try to hold down the spike in price, the government has reduced its tax on fuel sales.
The government said the increases were a result of the rise in the price of Brent crude oil.
The fuel price increase is the latest addition to South Africa’s economic woes, which include a 34.5% unemployment rate and an economic downturn caused by the COVID-19 pandemic which resulted in the loss of an estimated 2 million jobs.
Economists are warning of further increases throughout the year, which will hit consumers already dealing with rising food, electricity, and transport costs, University of Witwatersrand economist Professor Jannie Rossouw said.
The biggest impact would be felt by the poor, who are already facing economic hardship, he said.
“The government has to do what it expects ordinary people to do by also cutting costs and using public money frugally because reducing the fuel levy will have a big impact on its revenue collection,” he said.
“I’m not happy with the increase, it is too much. It will now be too difficult to buy food for the children, we will end up having to sell our cars to avoid petrol costs,” said Soweto motorist Mwelase Mooki as he waited in the gas station line to fill up his car before the petrol increase came into effect at midnight.
Fuel prices have also risen in neighboring Zimbabwe. Gasoline now costs about $1.70 per liter, up from $1.44 before Russia’s invasion of Ukraine. The government attributes the increases to the war in Ukraine.
To reduce fuel prices, Zimbabwe has reintroduced the mandatory blending of gas with ethanol produced locally. Starting Wednesday petrol will be blended with 20% ethanol, which will reduce the pump price by 7 cents, said information minister Monica Mutsvangwa.
Zimbabwe’s government said this week that it will also embark on a $20 million upgrade of an oil pipeline from Mozambique’s port city of Beira to increase its capacity and reduce the inland country’s reliance on trucks to deliver fuel.
Zimbabwe is grappling with sky-high inflation, with its annual rate rising from 66% before the Ukraine war to just over 130% in May. Prices of basic goods are spiking with a major factor being the increases in fuel prices. The state-owned bus transport company more than doubled its fares last week.
Uganda has also been battling rising fuel costs since 2021 after the government increased excise duty on petroleum products. However, the prices have surged even higher in recent months, driven by a brief period of shortages in neighboring Kenya as well as what the government sees as inflationary pressure stemming from the war in Ukraine.
A liter of gas in Uganda now costs about $1.50, a sharp rise from an average of $1 in early 2021.
The East African country is vulnerable to price shocks because the government doesn’t engage in price intervention, Stephen Kaboyo, an analyst with the Uganda-based asset management firm Alpha Capital Partners, said.
“In Uganda, the oil market was liberalized and prices are determined by the market forces, unlike other regional countries where oil prices are subsidized by their governments,” he said. “Therefore, any change in global oil prices is directly transmitted to the local pump prices.”
AP journalists Farai Mutsaka in Harare, Zimbabwe, and Rodney Muhumuza in Kampala, Uganda, contributed.
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