The Automobile Association of South Africa (AA) has raised concerns over escalating fuel prices and the ripple effect of fuel surcharges across multiple sectors of the economy.
AA Chief Executive Officer Bobby Ramagwede says ongoing geopolitical tensions between the United States and Iran have disrupted global crude oil supply, contributing to sharp increases in local fuel costs.
Earlier this month, the Department of Mineral and Petroleum Resources implemented a significant fuel price adjustment, with petrol rising by R3.06 per litre and diesel increasing by R7.37.
Ramagwede warned that further increases may be on the horizon, citing South Africa’s limited fuel reserves as a key vulnerability in an increasingly volatile global market.
While acknowledging the strain on consumers, he noted that government has tools at its disposal to help cushion the impact, including potential reductions in fuel taxes. Ramagwede expressed support for previous tax relief measures and suggested that further interventions may be necessary if global tensions persist and oil prices remain elevated.
He also highlighted structural challenges within the country’s fuel supply chain, explaining that South Africa relies heavily on imported refined fuel due to limited domestic refining capacity. As a result, the country is exposed to high international prices, as imported fuel is produced from costly crude oil.
Ramagwede added that stronger local refining capacity and adequate fuel reserves could have helped mitigate the impact, particularly if such measures had been implemented earlier in the global conflict.
The AA has cautioned that continued price pressures could have widespread economic consequences, affecting transport costs, goods and services, and overall inflation.