The Automobile Association of South Africa (AA) has issued a warning to the government.
Image: Armand Hough / Independent Newspapers
The Automobile Association of South Africa (AA) has issued a warning to the government, saying it is prepared to take action if petrol and diesel hikes are driven more by taxes than global oil prices.
This comes as South Africans continue to wait anxiously, bracing for record fuel increases that could reportedly push diesel above R30 per litre and petrol hikes beyond R5 per litre, largely due to the ongoing war in the Middle East that has disrupted global oil supply and driven prices higher.
In an interview with IOL, AA CEO Bobby Ramagwede said that he was not expecting a dramatic increase in fuel prices if South Africa’s strategic oil reserves are available, as these reserves could help buffer the impact of global oil price spikes.
“To the extent that we have those reserves, we’re not anticipating more than a RAND increase. However, should the reserves be low or unavailable, we could see higher increases, as our fuel price would then be more dependent on global oil prices and supply shocks.”
He pointed out that the country sold all of its strategic oil reserves in 2016, which were meant to act as a buffer during global supply disruptions. Ramagwede noted that, according to government statements, these reserves have since been repurchased.
“The purpose of those reserves is for a rainy day, much like what we’re currently experiencing".
He warned that if fuel price increases are driven largely by taxes rather than global oil prices, motorists could face higher costs than necessary.
“Special circumstances call for special action. It’s the opportune time for the state to adjust the levies and taxes to ensure that they don’t create a shock to the system by introducing high fuel prices," he said.
He said the AA was prepared to mobilise, together with large diesel-consuming groups such as towing and taxi associations.
"It will be quite telling to see what the state says about where we stand with regard to our reserves. A message to the consumer, as well as from the AA, is that we won't take this lightly.
"The AA is prepared to mobilise many of the larger consumers of fuel, being the towing association and the taxi association, to the extent that we are prepared to block national highways until the state is prepared to make the necessary changes to the tax component of the fuel price to ensure that there are no shocks to the system".
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