The Hidden Cost Of Expensive Oil Is The Choices South Africa Loses
When the oil price rises, the most visible consequence is at the petrol pump. The deeper economic cost is harder to see: every additional rand spent absorbing an external energy shock reduces the room households, businesses and economies have to make other choices.
A crude oil price of $97 a barrel may appear to belong to the world of commodity markets and geopolitical risk, far removed from everyday South African life. In reality, oil is one of the channels through which distant instability travels remarkably quickly into the domestic economy. Before the conflict discussed in Number of the Day began, oil was trading at about $70 a barrel. It later moved close to $120 and has now returned towards the psychologically significant $100 level. That movement matters not simply because motorists notice it at filling stations, but because fuel is embedded in the cost of moving people, food, goods and services around the country.
The petrol pump is only the first bill
The immediate effect of expensive oil is familiar. Petrol and diesel prices rise, households spend more getting to work and businesses face higher transport and operating costs. According to the figures discussed in the episode, petrol is about R7 a litre more expensive than when the war began, while diesel has increased by roughly R12 a litre. For a household, those increases compete directly with groceries, savings and debt repayments. For businesses, they can increase the cost of distribution and production, creating pressure that may eventually move through supply chains into the prices consumers pay.
That is why oil shocks become inflation shocks. Fuel is not an isolated purchase that disappears once a tank is full. It is an input into economic activity, and sustained increases can spread far beyond motorists. Francis Herd connects that pressure to the interest-rate environment as well: when inflation becomes too hot, borrowing costs can come under renewed pressure. The consequence is an uncomfortable chain in which an external geopolitical event influences fuel costs, those costs contribute to inflationary pressure, and households already spending more on transport may also face more expensive credit.
R56 billion reveals the less visible cost
The larger number in this story may therefore not be $97 at all. South Africa has reportedly paid about R56 billion extra for imported fuel during the period under discussion. Unlike the petrol price, that figure does not confront consumers on a roadside board every morning, yet it captures something more fundamental about the economic effect of prolonged dependence on an expensive imported input.
Gareth Edwards frames that cost through a deceptively simple question: what else could have been done with R56 billion? He points to schools, health clinics, potholes and malfunctioning traffic lights. The comparison should not be read as a literal suggestion that money spent on imported fuel could simply have been redirected into municipal or public budgets. Its importance lies in the opportunity cost it exposes. When a country must spend considerably more to secure something essential, that expenditure narrows the space available elsewhere in the economy. The shock does not merely create a larger bill. It reduces options.
Energy diversity is also economic strategy
That is why the discussion around alternative and cleaner energy cannot be separated entirely from questions of economic resilience. Francis points to countries that have benefited from having a broader energy mix, using China and Japan as examples in the conversation. A diversified energy system cannot protect an economy from every global disruption, but it can reduce the extent to which one imported commodity determines domestic costs.
The principle is familiar in finance. Concentration increases exposure, while diversification creates some protection when one part of a portfolio moves sharply against you. Energy systems operate at a vastly different scale, but the strategic
lesson is similar. South Africa cannot determine when wars begin, what major oil producers decide or how international commodity markets respond. It can, however, influence over time how completely those events are able to dictate domestic economic outcomes.
The latest move to $97 should therefore be read as more than another uncomfortable oil-price headline. It is a reminder that economic resilience is partly about preserving choices before the next shock arrives. The true cost of dependence is not measured only by the money that leaves the country when oil becomes expensive. It is also measured by everything that becomes harder to choose because that money had to be spent.
References
Number of the Day. 03 September 2026. eNCA. Episode transcript.
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