50 cents a litre: The price we’ll have to pay

FUEL will go up by 50 cents a litre on Friday.

It will be the fifth fuel price hike of the year and comes barely three weeks after the last increase. Last week, The Namibian’s sources revealed that the increase would most likely be steep, and this has been borne out by the latest increase.It will see Walvis Bay pump prices shoot up to N$6,44 per litre for unleaded petrol 95, N$6,42 per litre of lead-replacement petrol 93 and N$6,50 per litre of diesel, according to a Ministry of Mines and Energy press statement issued yesterday.The fuel increases are causing havoc for consumers.Namibians are increasingly having to tighten their belts with prices going up continually without any relief in sight for the consumer.This situation has left consumers jittery: increased fuel prices automatically mean a ripple effect on the prices of other basic commodities.On the back of fuel price increases, the annual inflation rate for July went up to 5,1 per cent – significantly higher than the 1,7 per cent registered during the corresponding period of last year.Motorists with diesel-driven cars have so far suffered the most, as the precious liquid has shot up by more than N$1,40 a litre in eight months – from N$5,09 a litre in January to the current N$6,50 a litre.Fuel prices have been going up steadily from January, when Namibians were welcomed into the new year with an increase which saw unleaded petrol going up to N$5,27 a litre, LRP N$5,25 and diesel N$5,09 a litre.The next hike was in April, when the prices of petrol went up by 20 cents a litre and diesel went up by 35 cents a litre.This was followed by another in June, then in July, and now a whopping 50-cent increase on Friday.In his statement, Mines and Energy Minister Erkki Nghimtina did not have much to offer as an explanation, save to drive home the same story that Namibia is neither a producer nor refiner of oil, hence the country was at the mercy of the oil producers.Other factors that come into play besides the price of crude oil include the under-recovery by the local market and the exchange rate fluctuations of the Namibian dollar against the US dollar – the currency used for the purchase of fuel.”It is worth noting that at present the world is faced by a demand-driven, supply-constrained system in the fuel market.The crude oil prices are being determined and driven by expectations of continuing economic growth driving the demand for fuels (China) coupled with fears of future supply disruption due to geopolitics (Middle East) or natural disasters (hurricanes in the US) in an environment of low surplus capacity,” said Nghimtina.However the ever-volatile price of crude oil this week slipped from a high of around US$78 a barrel to settle yesterday at around US$73 per barrel after a ceasefire between Hezbollah and Israel in Lebanon held for a second day.Nghimtina also cited under-recovery in the local market as another factor for the increase.According to the Ministry of Mines and Energy, after the fuel increase on July 24, Namibians were still paying 48 cents less for a litre of unleaded petrol, 47 less for LRP and 58 cents less for diesel than it costs to import these fuels.”Thus it necessitates an increase in fuel prices again in order to correct the shortfall,” justified Nghimtina.Users of public transport will be relieved to know that taxis and long-distance buses will not raise their fares in the immediate future.The President of the Namibia Taxi and Bus Association (Nabta), Magnus Nangombe, yesterday said his association would not increase fares after Friday’s hike.Nabta last increased transport fares by 10 per cent in June.The Ministry of Mines and Energy and economists have warned consumers to prepare for more increases due to world events such as problems in the oil markets of the Middle East, Iraq and Nigeria.Last week, The Namibian’s sources revealed that the increase would most likely be steep, and this has been borne out by the latest increase.It will see Walvis Bay pump prices shoot up to N$6,44 per litre for unleaded petrol 95, N$6,42 per litre of lead-replacement petrol 93 and N$6,50 per litre of diesel, according to a Ministry of Mines and Energy press statement issued yesterday.The fuel increases are causing havoc for consumers.Namibians are increasingly having to tighten their belts with prices going up continually without any relief in sight for the consumer. This situation has left consumers jittery: increased fuel prices automatically mean a ripple effect on the prices of other basic commodities.On the back of fuel price increases, the annual inflation rate for July went up to 5,1 per cent – significantly higher than the 1,7 per cent registered during the corresponding period of last year.Motorists with diesel-driven cars have so far suffered the most, as the precious liquid has shot up by more than N$1,40 a litre in eight months – from N$5,09 a litre in January to the current N$6,50 a litre.Fuel prices have been going up steadily from January, when Namibians were welcomed into the new year with an increase which saw unleaded petrol going up to N$5,27 a litre, LRP N$5,25 and diesel N$5,09 a litre.The next hike was in April, when the prices of petrol went up by 20 cents a litre and diesel went up by 35 cents a litre.This was followed by another in June, then in July, and now a whopping 50-cent increase on Friday.In his statement, Mines and Energy Minister Erkki Nghimtina did not have much to offer as an explanation, save to drive home the same story that Namibia is neither a producer nor refiner of oil, hence the country was at the mercy of the oil producers.Other factors that come into play besides the price of crude oil include the under-recovery by the local market and the exchange rate fluctuations of the Namibian dollar against the US dollar – the currency used for the purchase of fuel.”It is worth noting that at present the world is faced by a demand-driven, supply-constrained system in the fuel market.The crude oil prices are being determined and driven by expectations of continuing economic growth driving the demand for fuels (China) coupled with fears of future supply disruption due to geopolitics (Middle East) or natural disasters (hurricanes in the US) in an environment of low surplus capacity,” said Nghimtina.However the ever-volatile price of crude oil this week slipped from a high of around US$78 a barrel to settle yesterday at around US$73 per barrel after a ceasefire between Hezbollah and Israel in Lebanon held for a second day.Nghimtina also cited under-recovery in the local market as another factor for the increase.According to the Ministry of Mines and Energy, after the fuel increase on July 24, Namibians were still paying 48 cents less for a litre of unleaded petrol, 47 less for LRP and 58 cents less for diesel than it costs to import these fuels.”Thus it necessitates an increase in fuel prices again in order to correct the shortfall,” justified Nghimtina.Users of public transport will be relieved to know that taxis and long-distance buses will not raise their fares in the immediate future.The President of the Namibia Taxi and Bus Association (Nabta), Magnus Nangombe, yesterday said his association would not increase fares after Friday’s hike.Nabta last increased transport fares by 10 per cent in June.The Ministry of Mines and Energy and economists have warned consumers to prepare for more increases due to world events such as problems in the oil markets of the Middle East, Iraq and Nigeria.