Fuel prices go up 8pc

FUEL prices are rising in Zimbabwe as world crude oil prices start moving up-wards again after the sudden drop during the late 2008 recession.
Diesel and petrol have risen a little over eight percent in the last month, from anything between US$1,06 and US$1,09 depending on dealer for diesel to between US$1,15 and US$1,21 a litre yesterday, with similar percentages taking petrol up to between US$1,28 and US$1,31 a litre.
Since Zimbabweans only started buying fuel in US dollars last year, there is no obvious comparison with the runaway hikes in prices that hit all countries during the crude-oil boom that peaked in 2008.
But in the last few months, crude oil prices have risen by around 30 percent and while stable now are expected to continue edging up again next year as global growth resumes and demand rises again.
While motorists now have to find a few extra dollars to fill a tank, the rises should have minimal effect on other prices unless suppliers or retailers cheat.
Fuel costs are only a small percentage of the final price of almost all goods and so a small rise should have negligible effects.
The Government considers the price rises inevitable, and in line with a previously agreed formula that sees Zimbabwean prices fluctuate in line with global market prices.
Energy and Power Development Minister Elton Mangoma said fuel dealers were only reacting to the world markets.
"We are aware of this situation and it is necessitated by the world market as the price of oil has also increased and we are forced to react," he said.
Redan Petroleum ' one of the largest suppliers ' said along with the general global rise in prices, there was seasonal demand made worse by the bad European winter.
"Another push factor is the increased demand for winter stocking in Europe. There is always a high demand for oil around this time from the European markets as they experience chilling conditions in winter," a Redan official said yesterday.
Should oil prices continue rising, Zimbabweans will have to pay more for their fuel.
But fairly large increases in crude oil prices tend to translate into much smaller percentage rises in refined products as refining charges tend to be more stable and form a large percentage of the retail price.
A few service stations in Harare did run short of fuel recently, but this had nothing to do with the price rises.
Most importers use pipelines to bring fuel from Beira to Harare since this is easily the cheapest transport option and allows tighter margins in what has become a highly competitive business, with drivers prepared to queue at the stations with the lowest prices to save even a few cents.
However, pump problems, said an official with the oil industry, meant that the leg from Mutare to Harare was not in use.
So dealers had to send road tankers to Feruka, the terminus of the Beira-Mutare line, to collect fuel and those without adequate buffer stocks in Harare ran short for a day or two.
Traffic jams at Feruka added to delivery delays.
However, major companies seemed to be coping without noticeable problems, the smaller suppliers being the worse affected since they are more likely to be living from hand to mouth, ordering at the last moment to replenish stocks.
As with most businesses, working capital is tight with some suppliers.
Those companies with better capital or good coupon sales, which amount financially to pre-paid fuel with price risks assumed by the suppliers, normally had better buffer stocks that allowed them to stay open without interruption while they switched delivery systems.
But the official said that there was little chance of Christmas shortages.
Supplies were now coming in and early next week the Mutare-Harare pipeline should be back in operation with dealers able to collect supplies from the Noczim Msasa depot.