Even if govt amends fuel levy, the impact won’t be sufficient - economist

Ray White speaks to Dr Azar Jammine, the director and chief economist at Ecomometrix, on what the expected fuel price increase means for the South African economy.

The Department of Mineral Resources and Energy announced the increase to the fuel prices for this month. Picture: Pixabay

South Africans can expect their wallets to get thinner as another dreaded fuel price will be implemented on Wednesday as announced by the Department of Mineral Resources and Energy.

Opposition political party, the Democratic Alliance (DA) has proposed changes to fuel regulations, even suggesting the scrapping of fuel levies.

Ray White speaks to Dr Azar Jammine, the director and chief economist at Ecomometrix, on what the expected fuel price increase means for the South African economy.

He says the fuel hike is not endemic to South Africa but is a worldwide phenomenon due to the global fixation on moving to renewable energy sources.

This obsession with trying to move towards cleaner energy over the last five years has resulted in businesses under investing in fossil fuels such as oil, gas and coal and yet the world has not yet transitioned sufficiently to electric vehicles and clean energy… to reduce the world economy’s dependence on oil and coal.

Dr Azar Jammine, Ecomometrix director and chief economist

It caused a hiatus in investment into the supply of new oil and coal, which caused a price surge.

This, along with the Ukraine-Russia war, is exacerbating the fuel price increase, he adds.

Jammine says the rise in fuel costs will beget higher interest rates, adding an unfavourable knock-on effect on the growth of the economy.

However, even if government amends the fuel levies, the impact won’t be effective in reducing the brunt of rising oil prices, says the economist.

Listen to the full audio below: