South Africa: Fuel Price Shock Will Be Felt At the Dinner Table
South Africa’s latest fuel price increase is not simply a problem for motorists. It is another escalation of the cost-of-living crisis that is already forcing working-class households to make impossible choices between food, transport, electricity and other basic needs. From Wednesday, 7 October, petrol increased by more than R3 a litre, while diesel escalated by R3.24 a litre. The increase comes as households are already struggling to afford food. The latest figures from the Pietermaritzburg Economic Justice and Dignity Group (PMBEJD) show that its 44-item household food basket cost R5,488.06 in September, while the basic nutritional food basket cost R6,655.29. In Durban, the household food basket cost R5,364.64. (PMBEJD)
This is what the fuel price increase means in people’s lives: the price at the pump does not stay at the pump. Diesel and petrol are inputs into the movement of food, workers and goods across the country. When fuel prices rise, the additional costs are transmitted through transport, agriculture, food production, distribution and retail. PMBEJD has previously documented the exposure of South Africa’s food system to fuel price increases and the extent to which these costs can ultimately be passed on to consumers. (PMBEJD)
For households living on low and insecure incomes, there is very little room to absorb another increase. The September PMBEJD figures show that the national minimum wage is already R248.60 short of the household food basket. Once electricity and transport costs are taken into account, a minimum-wage worker supporting a family faces a R2,007.92 shortfall against the basic nutritional food basket.
This is why the government cannot discuss fuel prices as though they are an isolated market adjustment. South Africa’s dependence on fossil fuels has an economic cost. We are exposed to international oil prices, geopolitical instability, shipping costs and exchange-rate movements, while households have little capacity to protect themselves from these shocks. The latest increase follows a sharp rise in international crude oil prices. The government says Brent crude increased from an average of $87.89 to $101 during the period under review, with higher shipping costs and uncertainty around oil supplies contributing to the increase.
But simply explaining why the price has increased does not answer the more important question of those who are most vulnerable. Working-class households pay; workers pay more to get to work; families pay more to put food on the table. Small businesses face higher operating costs. Public transport users ultimately carry increases in operating costs. And households already struggling with energy poverty face another squeeze on their limited income.
This is precisely why a just transition cannot be reduced to replacing one source of energy with another. A just transition must reduce people’s vulnerability to volatile fossil-fuel markets and make the basic costs of living more affordable. South Africa needs to invest in reliable and affordable public transport, strengthen local and resilient food systems, expand affordable renewable energy, reduce household energy costs and develop an energy system that protects people from international fossil-fuel price shocks. The government must also confront the structural weaknesses that have left South Africa increasingly dependent on imported petroleum products. The answer to every fuel price shock cannot be for households to simply tighten their belts. People are already tightening their belts. There is no more belt to tighten.
groundWork calls for:
Immediate measures to protect low-income households and public transport users from the knock-on effects of the fuel increase;
A food and energy strategy that recognizes the relationship between fuel prices, food prices and household poverty;
A just transition that reduces South Africa’s exposure to fossil-fuel price volatility rather than reproducing it through new fossil-fuel infrastructure; and
A stronger public role in ensuring that basic energy and transport needs are met as social necessities, rather than being determined primarily by market prices.
The latest fuel price increase should not be viewed as another unfortunate monthly adjustment but rather a warning about the vulnerability built into South Africa’s current energy and economic system. When fuel prices rise, the cost eventually reaches the household table. For millions of people already struggling to afford food, that is where the real fuel price crisis is being felt.
By groundWork.
