Spiralling international oil prices could spark local fuel price hikes, a development that is certain to have ripple effects on cost of everything else.
Prices of fuel have been hovering around $120 per barrel, driven largely by uncertainty in oil-producing countries such as Libya.
Libya holds the largest proven oil reserves in Africa and the conflict there has been cited as the cause of recent crude oil hikes.
Motor Traders’ Association of Zimbabwe president Misheck Nyamupingidza told NewsDay yesterday that it was still not clear as to what extent rising global prices would affect the country.
“We cannot predict at the moment when we will see a fuel price hike,” Nyamupingidza said. “It, however, does not necessarily follow that if fuel went up in South Africa then we will also be immediately affected.
“At the moment, the country has enough stocks of fuel. The positive news is that demand for fuel in the Northern Hemisphere is beginning to slow down and this should result in the stabilisation of prices.”
He said the more stock the country had, the less likely it would be affected by the current price hikes.
Energy and Power Development minister, Elton Mangoma who is back at the office after days in prison, said: “Our fuel prices are linked to the international market. If fuel prices go up, our prices will also go up and if fuel prices go down on the international market our prices will also go down.”
In neighbouring South Africa, the price of petrol went up by 54c on Wednesday night sparking fears that local dealers could go the same route as some of them imported from that country.
Presenting his monetary policy review statement in January, Reserve Bank of Zimbabwe governor, Gideon Gono, warned that the continued increase in international oil prices was expected to have a knock on effect on the country’s inflation.
Reflecting increases in international oil prices, domestic fuel prices increased in December 2010 by more than 20%.
“The second round effects of the rise in fuel prices would be more pronounced as it is expected to cascade down to the other sectors of the economy,” said Gono.
Crude oil prices have been volatile over the last couple of weeks.
With basic costs on the rise, Zimbabweans would have to change their spending habits and this in turn would have a negative effect on the economic growth so vital to the future of the country.