How do you lower the price of fuel

The ANC and President Cyril Ramaphosa seem determined to lower the price of gasoline – raising it – with Business Tech reporting that the government is actively seeking ways to find a solution to the problem .

A Scottish colleague recently told me that he found the situation in South Africa puzzling.

Having lived in 50 countries around the world, he said that South Africa is the only place he has ever been where there is no competition in the world. Fuel industry. This is due to a simple reason: the government sets the price of fuel. Ramaphosa's assurances that the price of fuel is "out of government control" and that South Africa is a "price taker" are simply wrong. In April, the Automobile Association shared some interesting facts about the price of fuel.

In April, one liter of 95 unleaded fuels arriving at a service station in Gauteng costs 8.93 rand. This is the basic price of fuel, determined by factors largely out of control of South Africa, with the possible exception of customs duties.

Of course, we did not pay R8.93 for fuel so we paid R14.22. This is explained by the general fuel tax (R3.37 per liter) and the road accident tax (R1.93 per liter) that the government imposes on each liter of fuel. These surcharges are under the control of the government. For a 50 liter fuel tank with a total value of 711.50 rand, we only paid 446.50 rand for the actual fuel. The remaining R265 we paid in April for an oil tank disappeared into the gulf of inefficiency and government corruption.

Of course, the government can do a lot. It can lower, ideally, the general tax on fuel and the road accident tax.

The road accident fund has been down for several years. One should not expect SA consumers that they are paying the bill for this wasted inefficient money. But more than that, the government should withdraw from the determination of fuel prices. We pay exactly the same for gasoline that we buy from Shell, Engen, BP or Caltex – there is no competition between these fuel concessions. You can not try to gain more customers from others by charging less for fuel, because the government determines minimum and maximum prices.

While in the United States, you can drive a few kilometers down the road to the next gas station. pay less, in South Africa you are at the mercy of what the government has ordered to be the price.

At different times of the same day in the United States, the price could be cheaper or more expensive, because the market is allowed to react to changing circumstances.

South Africans should not ask the government to stop raising the price or lowering the price of fuel.

Instead, we should insist that the government leave fuel alone. Its arbitrary control of the fuel industry should be abolished in favor of free competition and the consumer-centric enterprise. – FMF.