BELINDA BERESFORD, Johannesburg | Friday
IT’S a great mystery: why are South Africans, a group with a rich heritage of protest, not toyi-toying at the petrol pumps and causing chaos across the country, like the Europeans?
After all, the British, renowned for their tolerance, have caused the Labour Party’s juggernaut to falter because of a 20% rise in the petrol price. In South Africa, over the last 18 months, the petrol price has risen by 60%.
In February last year, 93 octane petrol in Gauteng was R2,29 a litre. It is now R3,66 a litre. Diesel prices have increased only slightly less, while the price of paraffin – the fuel of the poor – has risen by over 100%.
The high price of oil could seriously retard the recovery of South Africa’s economy, which is recovering from a period of protracted high interest rates.
Economists are watching the likely impact on inflation that will affect the decisions of the South African Reserve Bank’s monetary policy committee. According to one analyst, consumer spending on fuel is likely to increase by almost 30% this year, leading to a massive 18% rise in total consumer spending.
Heightened inflationary fears are likely to mean no immediate cuts in interest rates, and could even lead to increases. The committee this week decided once again to hold fire on tightening monetary policy.
Then there is the rand, which declined sharply to below R7,30 the dollar this week, and is likely to take a further pasting if the oil prices remain high.
One analyst estimates that even if oil imports decline by about 8% this year – because of increased domestic production by Sasol, the use of oil reserves and a fall in demand – the cost to the economy will rise by about R9bn.
When it comes to protesting at the petrol pumps there is a significant difference between South Africa and Europe. European governments have much more control over the petrol price since just more than 70% of the petrol price is actually government taxes. In South Africa taxes only make up 27%, giving the state much less room to manoeuvre.