Why petrol stations have fuel shortages when price hikes loom

Wednesday's R1,62 petrol price hike also saw speculation emerge that petrol stations are withholding fuel stocks in order to benefit from the price increases. However, Fuel Retailers Association's Chief Executive Officer Reggie Sibiya says that this practice would make no sense for station owners.

According to Sibiya petrol stations still make the same net margin, regardless of what price they sell their stock at. He says there is no retailer that would take that kind of risk to lose.

Image courtesy of Eyewitness News.

Fuel delivery times

Sibiya says that it is always a problem for retailers to sustain fuel supply on the eve of a petrol price increase. He explains that while trucks are on the road to deliver, often on the eve of a price hike demand spikes and the petrol is depleted before the delivery arrives to supplement the demand.

Price increase is tricky because the fuel deliveries happen in the early hours of the morning or late at night for the retail sector. During the day, most of the deliveries are targeted to the commercial sector.

Cape Town's unstable supply

Sibiya told CapeTalk's Kieno Kammies that Cape Town has had a very unstable supply for the past two months. This has been caused by fuel company Chevron’s planned upgrades that were not well-managed with supply back- ups. He says there has also been a problem with the wings of the of the shipments making it difficult to offload stock.

Even before the price change, Cape Town has been on the radar dealing with the department and the oil companies to try and manage the situation.

Image courtesy of DirectAxis. Find the full info-graphic here.

Listen to the full conversation on Breakfast with Kieno Kammies:


This article first appeared on 702 : Why petrol stations have fuel shortages when price hikes loom


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