13 July, 2011 16:59

Ntsakisi Maswanganyi

Economists warn of effects of fuel shortage

Although the immediate impact of the petroleum industry strike and fuel shortages may not be put in monetary terms just yet, the economic ramifications will be dire, economists have warned.

Image: Reuters

Freddie Mitchell, an economist with Efficient Group, told I-Net Bridge/BusinessLIVE that "some lower economic activity" should be expected following reports of fuel shortages at some filling stations, especially around Gauteng.

Fuel was not being delivered to filling stations due to a strike by the Chemical, Energy, Paper, Printing, Wood, and Allied Workers Union (Ceppwawu), the General Industries Workers' Union of SA (Giwusa) and the South African Chemical Workers Union (Sacwu).

Union demands included a wage increase of between 11% and 13% across the board, a minimum wage of 6,000 rand per month and a ban on labour brokers. Employers offered between 4% and 7%.
Mitchell suggested that without fuel, economic and trade performance and "anything related to moving goods from one point to another" would be affected.

Chris Hart, an economist at Investment Solutions, referred to the strike as a "difficult set-up" because the strike was "snowballing".
Fuel shortages would increase inefficiencies, Hart added.

Contracting other workers to deliver the fuel to filling stations by fuel retailers carried some risks, Mitchell and Hart suggested.

"One may have to resort to contracting, but there's quite a bit of intimidation and violence associated with strikes," Hart said. Mitchell said even those not participating in the strike and would like to help out by delivering the fuel were hesitant as "you're not sure you're going to make it back".

Jac Laubscher, group economist at Sanlam, said it was difficult to make "definitive" statements on the kind of impact the fuel shortages would have on the economy, but noted that fuel was a basic input in transport and that any shortages could be "very disruptive if we see them on a large scale".

 



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