While some experts have warned that South Africa’s petrol prices could climb to as high as R40/litre on the back of Russia’s invasion of Ukraine, this is highly unlikely, says Efficient Group senior economist Dr Francois Stofberg.
Instead, the Efficient Group’s ‘extreme scenario’ would see petrol reach somewhere around R30/litre – and several things would have to go very wrong in the coming months to reach this price.
At these extreme levels, and considering the stickiness of oil prices, every company and country will be motivated to produce oil, he said. “So, even if prices increase 80%, consumers will only feel 51% of that 80% price increase , meaning that fuel prices will most likely, in a worst-case scenario, only go up to around R30 a litre.”“It is somewhat true that if fuel prices increase, ‘everything’ becomes more expensive – but too many South Africans believe that everything becomes unbearably expensive,” said Stofberg.
“If you want a more accurate estimate of the indirect impact of higher fuel prices, it is better to consider the share of ‘petroleum products’ as inputs among producers.
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