If truth is, as the old saying goes, the first casualty of war, then the consumer’s wallet is surely the second.
Long before the fighting settles, households begin paying for distant conflicts through higher prices, tighter budgets and difficult trade-offs. Few issues make this connection as clearly as fuel.
When conflict flares in the Middle East, particularly one involving Iran, the effects are felt far beyond the region itself. For South Africans, the impact arrives at the petrol pump, in taxi fares, in grocery bills and in the everyday cost of getting on with life.
Alarm
As the Automobile Association (AA), we have been sounding this alarm for some time. The wolf we said was coming has now arrived. For years, the AA called on government to identify and build strategic fuel reserves and to kick off a serious refining programme well in advance of a crisis of this nature.
Had those steps been taken, South Africa would have meaningful buffers today, greater capacity to ride out external price and supply shocks and a broader set of levers to pull when global conditions deteriorate.
Instead, we are at a point where the only lever readily available to us is the tax on fuel. And that is a precarious place to be. The key dynamic at play in the current crisis is not only physical supply, but fear and uncertainty.
Energy markets
Energy markets react swiftly to perceived risk. Even before a barrel of oil is lost, traders price in disruption. Since the escalation of hostilities this year, concerns around the Strait of Hormuz have returned with force.
This narrow maritime corridor normally carries around a fifth of the world’s oil and liquefied natural gas. When shipping through it is threatened, delayed or selectively restricted, global prices respond immediately.
Global instability
For SA, this matters because we do not control the fundamentals. We import most of our crude oil and refined fuel, and we pay for it in dollars. Two variables, therefore, dominate what motorists and consumers see at the forecourt: the international oil price and the rand-dollar exchange rate.
In periods of global instability, emerging market currencies like the rand tend to weaken as investors move to safe-haven assets. When the oil price surges at the same time as the rand softens, the impact on local consumers is swift, harsh and compounded.
It is important to separate price anxiety from supply reality. South Africa is not facing a national fuel shortage. Recent disruptions in some areas were caused by panic buying and distribution challenges, not a lack of product.
Risk
The immediate risk is escalating prices rather than empty pumps, and that distinction matters because price shocks travel beyond private motoring. Fuel is an economy-wide input. When it becomes more expensive, transport costs rise first, affecting tractors, taxis, buses, delivery fleets and freight operators.
Food prices and basic goods follow as logistics costs work through supply chains. What is less often acknowledged is that almost 20% of our energy is produced by diesel generators. The fuel price is not simply a motoring issue but a national cost-of-living issue.
Recognising this pressure, government intervened at the end of March with a temporary R3.00 per litre reduction in the general fuel levy for April 2026.
The AA fought for and supported this decision. More recently, the government proposed the relief for diesel be raised from R3.00 to R3.93, the entire general fuel levy, before halving it in June.
Relief
Petrol users receive no additional relief, but the breathing room offered in April will remain. One could be cynical and say that the drip-feed strategy of not removing the fuel levy – and other associated taxes – all at once was a smart political move.
It allowed the government to appear caring by stepping in, as it were, on several occasions. But the fact that the levy on diesel was removed altogether in as little as two months means the government realises the pressure the economy is under, while not having any other options available.
From the AA’s perspective, deploying that relief boldly and early prevents a larger inflationary shock and provides genuine breathing room while global conditions remain volatile.
Petrol price
With petrol expected to increase by R2 per litre and diesel by R5 in the months ahead, the stakes of getting this wrong are significant. Prices rise quickly but fall slowly.
The structural frustration is deeper still. The general fuel levy flows into the fiscus, but there is little evidence it has contributed meaningfully to fuel affordability, refining capacity, infrastructure or the advancement of alternative energy, whether fossil fuels or new sources.
RAF
The Road Accident Fund presents a similar concern, collecting more than it requires yet remaining in deficit. These are not abstract complaints. They go to the heart of why SA finds itself with so little room to manoeuvre at precisely the moment it needs it most.
A government that is very good at collecting money, but far less disciplined about deploying it appropriately, has left ordinary households exposed. In the short term, government must use every available lever to shield consumers from further harm.
Over the longer term, SA must rebuild oil reserves, invest in refining capacity, ring-fence levy revenue for its intended purpose and commit to energy diversification. We must ensure that when the next crisis arrives, we are not again standing at the pump with nothing to offer but regret.
Bobby Ramagwede is CEO of the Automobile Association of SA
