South African motorists flocked to gas stations on Tuesday ahead of record fuel price hikes that took effect at midnight, as the world continues to feel the effects of the war in Iran that has impacted global prices for oil and its derivatives.
This comes despite the country’s finance minister, Enoch Godongwana, announcing on Tuesday a reduction of 3 rand (US$0.18) per liter of fuel, in an attempt to cushion the impact of the price increase.
The increase of 7.51 rand ($0.44) in the price of diesel and 3.06 rand ($0.18) for gasoline has already caused shockwaves in the African nation.
By Tuesday night, some gas stations in eastern Johannesburg had already run out of diesel and gasoline.
At some stations, only gasoline was available. And at those that still had fuel, the lines were growing longer.
Godongwana said on Tuesday that the conflict in the Middle East had increased risks to global energy markets and put pressure on domestic fuel prices.
The reduction in fuel tax for April, before South Africa announced adjusted fuel prices again in March, would cost the government 6 billion rand (more than $351 million) in lost tax revenue.
The country has also been affected by logistical delays in fuel distribution, with dozens of stations running out of stock and others beginning to ration purchases for customers. Some imposed limits of between 30 and 50 liters (8 to 13 gallons) per vehicle.
“Even after fuel taxes were cut, these are the biggest increases in recent history and would be devastating for consumers,” commented Theuns Du Buisson, an economic researcher at the Solidarity Research Institute.
He noted that fuel price increases, especially the record rise in diesel, would have a devastating effect on logistics and transportation costs, as well as repercussions for inflation in the coming months.
Since most South Africans use public transport, the impact is likely to be felt most acutely in low-income households, Du Buisson said.
Bus service in the capital, Pretoria, was disrupted on Tuesday due to a fuel shortage, the municipality reported.
