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I shudder to think of the knock-on effects that would come with fuel hitting R40 a litre.

In May, in what he described as a worst-case scenario, André Thomashausen, emeritus professor of international law at Unisa, said South Africans could expect to pay about R40 for a litre of fuel.

Thomashausen says that gas prices across the EU could increase “tenfold” due to events in Russia and Ukraine, which would lead to a price explosion across other energy sources, with liquid fuel in the firing line.

Well, that worst-case scenario appears to have edged a little closer with another voice added to that R40 a litre conversation.

The Western Cape agriculture MEC Ivan Meyer and the Cape Chamber of Commerce and Industry had an emergency meeting last week, reports BusinessTech, with the following concerns raised:

• The price of fuel may rise to as high as R40 a litre, with wheat farmers reporting a 100% increase in fertiliser prices;
• Scanning for explosives and weapons in Russia-bound containers  increased transit time to St Petersburg from 23 days to 90;
• Moscow’s suspension from the Swift (Society for Worldwide Interbank Financial Telecommunication) global payments system delayed payment for exports to Russia.

When fuel prices go up, so too does everything else.

The Organisation Undoing Tax Abuse (OUTA) wants the South African government to extend the R1,50 general fuel levy relief for another month, in order to prevent an increase of roughly R2,50 per litre come next month.

That may offer some temporary relief but as this excellent Moneyweb breakdown shows, that’s only part of what makes up the total cost.

Investec chief economist Annabel Bishop said last week that another petrol price hike is currently building for July of R1,92 per litre. That’s in line with what OUTA said earlier this week. Below from IOL:

OUTA said on Monday it predicts that motorists could be paying R1,75 more for fuel from July 6…

Minister of Finance Enoch Godongwana extended the general fuel levy relief on May 31 this year, saying it would be R1.50 until July 6, then drop to R0.75 until August 2…

“Petrol is extremely expensive now. It is impacting on inflation. It is impacting on commuter pricing. So instead of dropping it to R0.75 for another month, keep that R1.50 reprieve in place,” [OUTA CEO Wayne] Duvenage added.

Finance minister Enoch Godongwana has said that the general fuel levy (GFL) relief measures cost the government roughly R2,7 billion each month.

Much the same as the last time we wrote about that R40 a litre talk, this remains speculation and we are a long way from hitting that point.

Still, the consistent rise and rise over the past few months is only going to worsen as the invasion of Ukraine continues and so too do sanctions against Russia.

[sources:bustech&iol]