Petrol price increase could have been avoided

On Wednesday the petrol price will increase by 93c per litre. Most South Africans can ill afford this increase, which could have been avoided if the Department of Energy had taken heed of the DA’s proposals to adjust the petrol pricing formula.

Petrol can be much more affordable if government taxes and levies are reduced to a minimum and the basic fuel price reflects oil supply fundamentals over the long term.

The Department of Energy has admitted that the latest price hike is partly the result of a new ‘retail margin’ in the petrol pump price formula. Such a unilateral decision is undemocratic at best and economically senseless at worst.

“This new ‘retail margin’ was purportedly agreed to at the Motor Industry Bargaining Council in September 2010. But its inclusion in the already-controversial petrol pump price formula has not even been discussed in Parliament. I will be tabling a motion for debate on this issue, placing it in the broader context of how government plans to deal with increasing future oil prices” said Lance Greyling from the Democratic Alliance.

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The basic fuel price is driven by the international oil price, which fails to reflect supply fundamentals and local conditions. Then there are a number of other levies and taxes that are added to arrive at the petrol price. These include the ill-conceived road accident fund levy, and now a new subsidy for paying ‘wages of service-station pump attendants and cashiers’.

“While the DA is strongly in favour of improved working conditions and pay for these workers, the mechanisms by which it happens must first be debated in parliament. This would also serve to provide surety that any agreed subsidy actually reaches its intended recipients”, added Greyling.

Such ill-conceived policies will simply add a further cost burden to South Africans who are already under pressure just to survive. The Department of Energy must urgently consider our proposals to adjust the petrol pricing formula and relieve some of the pressure.