How Will Petrol Price Hikes Impact South Africa?

South Africans, together with the rest of the world, have been battered by rising petrol prices in the past 6 months.

With the recent financial turmoil in the most powerful economy in the world, however, we could very well see a drop in the global oil demand, hopefully translating into paying a whole lot less at the pumps.

Market volatility a sign of the financial turmoil on Wall Street

Crude oil prices have been volatile over the last couple of weeks and have added fuel to the fire of the current global economic meltdown.

In mid-September, crude oil prices leapt into triple-digit territory for a very brief period of time, largely due to the weakness of the dollar, associated with the demise of the biggest investment bank in the US, and the recent battering of the oil-rich Gulf Coast by two powerful hurricanes.

As consumers, each of us has felt the negative impact of rising petrol prices. It is not only the cost of filling the tank that is crippling, but the knock-on effect of commodity prices,  particularly spiralling food costs, that has left the vast majority of South Africans struggling to make ends meet.

Negative economic growth our biggest threat

With basics costs on the rise, South Africans will have to change their spending habits and this in turn will have a negative effect on the economic growth so vital to the future of our fledgling democracy.

All is not gloom and doom though, as early indications are that the demand for oil will be markedly less due to the global economic slowdown and this in turn will translate into cheaper petrol, lower food prices and generally a bit of relief for the hard pressed consumer, both locally and abroad.