Oil and fuel price increases drive the rising costs of living: South Africa must demonstrably explore alternative sources
4 October 2023
“South African must urgently find ways to buy oil directly from Venezuela and Russia at discounted prices”, said SACP General Secretary Solly Mapaila. He was addressing the SACP’s Red October Campaign 2023 launch on Sunday in Phuthaditjhaba. He said demonstrably exploring alternative oil and fuel supply sources can go a long way in helping our nation to reduce imported oil and fuel price increases and bring down the ever-rising cost of living, which is now a crisis affecting millions of South Africans. Mapaila was addressing a rally under the campaign’s theme, “Put people first, fight the cost-of-living crisis”.
The SACP will hold its Central Committee plenary from Friday to Sunday to strengthen its efforts on these matters, among others. SACP National Office Bearers led by Mapaila will on Sunday, 8 October 2023 at 1pm hold a press briefing at COSATU House in Braamfontein to communicate the key outcomes from the plenary of the Party’s highest decision-making body in between its national congresses.
The international average Brent Crude Oil price recently increased by US$7.08 from US$84.78 to US$91.86. International average petrol, diesel, illuminating paraffin and liquefied petroleum gas prices also increased. The hikes culminated in the products’ prices increasing in South Africa from 12am on Wednesday as announced by the Department of Mineral Resources and Energy.
Among others, consumers now pay over R1 extra per litre for petrol and approximately R2 extra per litre for diesel. Now, Unleaded Petrol 95 costs consumers more than R25 per litre in inland regions such as Gauteng Province and more than R24 per litre in coastal regions. Previously, oil, petrol, diesel, illuminating paraffin and liquified petroleum gas prices culminated in increases in the prices of the products and services produced and transported with oil and fuel as inputs. Similarly, transport fares increased as well.
South Africa has no control over international oil, fuel and gas price increases, which result in imported inflation. On Tuesday in its statement explaining factors behind the oil, fuel and gas price increases, the Department of Mineral Resources and Energy said: “International factors include the fact that South Africa imports both crude oil and finished products at a price set at the international level, including importation costs, e.g., shipping costs”. The department further said major oil producers, Saudi Arabia and Russia, adopted extended oil production cuts, and oil inventories are low globally.
But the South African Reserve Bank has reacted to the imported inflation with interest rate hikes. Mapaila said the “Reserve Bank hiked interest rates ten times since November 2021, adding 475 basis points to the repurchase rate, which now stands at 8.25 per cent. But this is the rate at which the Reserve Bank lends to commercial banks.”
“The commercial banks, which also lend depositors’ funds, charge most people the prime interest rate plus on home, vehicle, other household and personal loans. Now the prime lending rate stands at 11.75 per cent”, he said.
Mapaila further said: “Interest rates are part of the rising cost-of-living drivers. The Reserve Bank has forced millions of families to redirect increased household spending towards interest rates, away from essential needs. Every time the Reserve Bank increased interest rates, it automatically increased household debt without those affected taking additional loans.”
“The commercial banking oligopolies, which serve as the Reserve Bank’s monetary policy transmission structure, force the majority of families to repay a single home loan with an amount that can buy at least two homes. These financial parasites charge prime plus compound interest rate, sentencing their financially exploited victims 20 years or more in debt repayment,” he said.
Mapaila called on organised worker formations to unite in a progressive left front and to organise the unorganised to wage a relentless battle for a caring and developmental monetary policy, and over and above that, against austerity. This should be part of the struggle to resolve the cost-of-living crisis, he said.
However, the department did not mention a crucial factor. The imperialist regimes of the United States and Western Europe imposed unilateral sanctions on Venezuela, a country with the world’s largest known oil reserves, and on Russia, another world’s major oil producer. This is part of the imperialist regimes’ war, which they provoked through their eastward expansion aimed immediately at Russia. They used Ukraine as their launching pad in seeking its addition to their imperialist war military alliance called NATO as part of their expansionism. The imperialist strategy is ultimately aimed at China, which the United States is provoking in the Taiwan Strait and with trade wars.
Meanwhile, the US-led imperialist regimes, and the institutions they control, such as the International Monetary Fund, and consequently uncritical national departments of finance and central banks at the service of its propaganda, spread the propaganda that Russia is responsible for the global price increases. “The imperialist regimes banned Russia Today TV and disconnected its signal to countries such as South Africa”, said Mapaila. This draconian censorship is aimed at straitjacketing the global population through a monopoly of their broadcasters and news agencies, which push their propaganda. They will not fool everyone. The SACP rejects and denounces their propaganda.
The unfolding global cost-of-living crisis makes intensifying the struggle against imperialism more imperative. The world working-class and progressive forces from all countries need to unite against the US-led imperialist aggression which is automatically supported by Western European regimes to bring it to an end, towards a just and peaceful world.
Issued by Alex Mohubetswane Mashilo, National Spokesperson & Political Bureau Secretary for Policy and Research, 4 October 2023
