Zimbabwe braces for fresh round of fuel price hikes

ZIMBABWEANS are bracing for more fuel queues

By Staff Reporter

CASH STRAPPED Zimbabweans should brace for yet another 50 percent fuel hike in the months of September and October this year following announcements by oil producing nations that they are increasing the cost of crude oil due to acts of terrorism and other developments in the Middle East and in the Gulf region, it has been learnt.

The situation, according to oil industry sources, has been further worsened by problems currently affecting Russia's largest and the world's fourth biggest fuel supplier, Yukos international, in the last three months.

The Reserve Bank of Zimbabwe (RBZ) director and chief economist, Erich Bloch, confirmed to New Zimbabwe.com that the prices of diesel and petrol are definitely going to go up in the coming three months.

"The disturbances in the Middle East have already had a major effect on the world price of crude oil and the world price has already gone up from approximately US$30 (Z$168 000) a barrel to over US $ 45 (Z$243 600) per barrel in the last three months and the increase represents an increase of 50 percent," Bloch said.

He said Zimbabwe has not yet increased the price of its fuel because the country was still receiving and importing fuel that was paid for a long time ago.

"The fuel that we are receiving was paid for a long time ago but in the coming few months the price of fuel will go up by between 40 percent and 50 percent and it does not matter which country we are getting fuel from because all countries are following world prices," Bloch said.

The fuel prices, were likely to go up by over 60 percent if security concerns in Saudi Arabia, Iraq, Middle East, Russia and Venezuela continued to mount.

Bloch said the fuel increase would impact negatively on the country's inflation rate and will affect all facets of industry.

"Although the inflation rate was going down in Zimbabwe but with the recent negative developments in the Gulf, Russia, Middle East and other oil producing nations, the rate of inflation will be seriously affected," said Bloch.

"Fuel price increases will push up inflation and it will have an effect on all sectors of the economy that rely on fuel, sectors like agriculture,importation of inputs, fuel for operation of machinery, fuel for boilers and all that would result in the wholesale increase of prices of all basic commodities in the country."

Bloch said generally the rules indicated that with every 10 percent increase in the price of fuel, inflation went up by two percent.

"Therefore, with the 50 percent fuel increase we are anticipating that inflation will go up by 10 percent in the coming three months and that will not reflect very well on the efforts we have made so far to contain inflation," he said.

Bloch said the recent heightened actions of terrorism among the oil market producers and traders compounded by fuel supply disruptions in the Saudi Arabia, Middle East, the Yukos court case in Russia, Hurricane Charley in the United States of America and underproduction in Venezuela had significantly contributed towards the predicted sharp increase in oil prices.

Bloch said Zimbabwe was no exception from the threats the world is facing today but predicted that the negative development would last only for a few months before calm returns to normal.

Oil industry experts, who spoke to New Zimbabwe.com in Bulawayo, said the price increases will have an effect on local and long distance transport costs.
JOIN THE DEBATE ON THIS ARTICLE ON THE NEWZIMBABWE.COM FORUMS
editor@newzimbabwe.com