Government could cut the petrol price – if it wanted to

When Jacob Zuma voiced his concern in a speech last month about escalating fuel prices, I was sure that every South African—with the exception perhaps of the current cabinet incumbents and the managers of Sasol—would have been willing to forgive him all his past indiscretions in exchange for the prospect of seeing just one member of the ruling party doing something about the crippling effect high fuel prices will have on the poor.

Mr Zuma is either a brilliant politician or a brilliant marketer; so far I am undecided. But he is very good at saying what most people want to hear. Whether his words will translate into action remains to be seen.

To speak out publicly against Robert Mugabe is one thing. About the high price of food is another. But for someone who probably will run this country one day to actually come out and say that something has to be done about fuel prices! Well, either he is very naïve, or just hoping that most of us won’t remember what he said when he was just president of the ANC and trying diplomatically to make many of the present bunch of ministers look silly.

These days, that does not appear too difficult.

The thing about the fuel price is that governments make much money out of it in terms of levies, taxes, more taxes, then quite a bit more tax as well. When cabinets such as ours look at doing something about fuel prices, they must be so overawed by the amount of money that fuels the fiscus that they can’t see any way of reducing prices without making a hole the size of Canada in our national budget.

So, they just don’t rock the boat, even though it belies democracy and the free market system we are supposed to nurture.

Perhaps the first thing Mr Zuma should look at is to follow the example of so many oil-producing Arab states which provide their people with cheap petrol.

He can begin by asking himself why Sasol, created with taxpayers money, is allowed simply to increase its oil-from-coal price to match the global going rate.

Imagine if our wine producers raised their local prices to meet international averages. Or if South Africa’s lone whisky producer decided to raise prices to that of imported Scotch? They’d go out of business fast.

And the reason every normal business would go bankrupt if it followed Sasol’s train of thought is because most businesses are governed by supply, demand, and other free-market forces.

Sasol is not. The petrol price is regulated and fixed. And every government so far in this country has been too terrified to deregulate, because it would mean less tax revenue. And that would mean that a whole lot of service stations would go bust and people would lose their jobs.

One needs to ask this question: Right now, with companies like BP having announced a first-quarter profit increase of 63% this year, and Sasol making money hand over fist, does it make sense to protect a handful of service stations and maybe 1000 jobs while the petroleum industry is sticking its greasy fingers into the pockets of the poor and ripping out every last cent they can lay their hands on?

It does not take a rocket scientist to realise that petrol price increases mean that everything else goes up in price. The people who bear the brunt of this, as always, are the poor. Millions of poor people in this country alone.

With Sasol producing roughly a third of the petrol we need, what, I ask, is stopping us from doing what the Arab states do and bring our petrol price down by making Sasol sell to local refineries at a reasonable price?

They can make a reasonable profit by all means, but these monstrous profits have the potential to kill South Africans faster than TB, malaria or Aids. Even faster than bad driving.

And why not deregulate the price? Let Raymond Ackerman sell petrol at cost if he wants to. Sure, I feel sorry for the service stations that will go bust as a result, but their numbers are tiny compared with the millions who are being strangled by this stupid insistence on regulating prices.

I wonder if our political leaders realise that history has shown that more governments have collapsed over the price of bread than anything else. It is a cop-out to say that oil prices are out of South Africa’s control. The government can do something—if it really wants to.