Free Market Foundation’s views on fuel pricing

Consumers continue to suffer from escalating fuel prices. Photo: Leseho Manala

 

The seemingly uncontrollable hikes in the price of fuel dampen prospects particularly for the poor to attain their dreams for a better life.

This from the contagion factors of rises in taxi fares, basic food prices and other essential aspects of preserving their basic rights.

A researcher with the Free Market Foundation waded in on this matter. In a statement, Martin van Staden suggested an open exploration of options for lowering the cost of fuel. He added, “Cyril Ramaphosa appears determined to do so [lower the fuel price] – in the midst of all the fuel hikes – with Business Tech reporting that government is ‘actively seeking ways’ to find a solution to the problem.”

Van Staden said this stems from the bewildering lack of competition in the country’s fuel industry. “The president gives untrue assurances that the fuel price is ‘beyond the government’s control’ and that the country is a ‘price-taker’.”

He referred to facts released by the Automobile Association (AA) indicating that in April this year, one litre of 95 unleaded fuel was sold to Gauteng petrol stations for a basic price of R8,93 determined by external factors excluding custom’s duties.

“Yet, the consumer was charged R14,22 inclusive of added government controlled surcharges comprising general fuel levy of R3,37 per litre and the Road Accident Fund levy of R1,93 per litre of fuel. This implies that consumers paid R711,50 for 50 litres of fuel, which was delivered to stations for R446,50 before the added levies,” said Van Staden who added that it equates to a difference of R265 which ‘disappeared into the pit of government inefficiency and corruption’.

He said the price can be lowered by government abolishing the general fuel levy, which ‘government has misdirected from the road-fixing mandate’ and the Road Accident Fund levy that is ‘allocated to an institution which has been broken for several years’. He urged for consumers and taxpayers to be excluded from footing the bill for ‘inefficient and arguably unconstitutional waste of money’. He suggested the government rather exclude itself from setting fuel prices, which are similar at all franchise fuel suppliers.

“The removal of control in minimum and maximum pricing will allow for competition through pricing by suppliers trying to coax customers.” He made reference to the US, where suppliers, a few kilometres apart, charged differently with market forces determining the price.

“Their prices could differ the same day based on market forces, competition and variables between states, causing fuel consumption taxes to differ.”

Van Staden further disapproved of centralised control saying it prohibits the market and threatens legal sanction on attempts to offer a lower price for fuel. He urged citizens to become involved, against government’s arbitrary control in price-setting in preference to free competition and consumer-centric enterprise.

Details: Jayne Boccaleone 082 904 3616; Gail Day 011 884 0270.

  AUTHOR
Leseho Manala

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