As bombs fall on oil infrastructure across the Middle East and Brent crude trades above $100 a barrel, South Africa is bracing for the impacts of a brutal fuel price increase. For millions of South Africans already struggling with the cost of living, the pain is real and immediate: higher transport costs feed directly into food prices, logistics costs and the price of almost every manufactured good. Producers will pass the cost through — and it is invariably those at the bottom of the income ladder who absorb the most.
Mineral & petroleum resources minister Gwede Mantashe’s response has been predictable: South Africa must urgently explore and exploit its own petroleum resources. Speaking at the Southern Africa Oil and Gas Conference in Cape Town this week, he pointed to major gas discoveries in the Outeniqua Basin and prospective oil finds in the Orange Basin. “We must act decisively, responsibly and in the national interest to unlock the full potential of our petroleum sector,” he told delegates, framing environmental groups that have blocked exploration through the courts as a “liability”.
It is a seductive argument, and it contains a kernel of truth: over-reliance on imported refined petroleum products does leave the country exposed. But the minister’s diagnosis, and the cure he is proposing, deserve more scrutiny.
The flaw in the logic
Even if South Africa were to successfully develop its offshore reserves, a process that optimistically would take well over a decade, it would not insulate the country from the price shocks now battering household budgets.
Oil and gas are traded on global commodity markets. The price South Africans pay at the pump is determined not by where the crude was extracted, but by what traders in London and Singapore decide it is worth on any given day. Supply security and price security are not the same thing, and conflating the two is at the heart of the minister’s error. More domestic drilling would not have prevented this crisis, and it will not prevent the next one.
Who is not feeling the pain
While the oil price shock hammers transport and logistics, electricity consumers are, for now, sheltered: the National Energy Regulator of South Africa (Nersa) regulates electricity tariffs, meaning pump price volatility does not translate directly into power bills. But Eskom’s need for cost-reflective recovery means that shelter is not guaranteed, and it is precisely here that the Integrated Resource Plan’s (IRP’s) envisaged expanded role for gas-fired power generation creates cause for concern.
Should South Africa lock itself into gas-dependent electricity generation, future price shocks of this kind would flow straight through to the cost of power, repeating the experience of European industry in 2022, when gas prices spiked after Russia’s invasion of Ukraine and electricity tariffs surged with them.
Renewable energy offers a structurally different proposition. Once a solar or wind plant is built, the marginal cost of generation is essentially zero and the price is fixed for the duration of the contract. The IRP’s gas ambitions should be revisited in that light.
Businesses like Shoprite, which have already invested in on-site solar generation, are demonstrating another dimension of this advantage: self-generation not only insulates against fuel price shocks, but it also reduces dependence on Eskom tariffs. The cost of solar photovoltaic modules has fallen by more than 80% since 2009, and commercial payback periods have shortened to the point where self-generation is now a straightforward financial decision as much as an environmental one.
The same logic applies in transport. Woolworths, in partnership with Everlectric, has deployed a large-scale all-electric online food delivery fleet powered by renewable energy as well as axle-powered refrigeration trailers on their long haul routes operated by DP World, reporting significant savings on total fleet operating costs.
Electric commercial vehicles can cost 40%-60% less per kilometre to run than diesel equivalents. When charged from self-generated solar power, the insulation from oil price spikes is near total. South Africa could and should be capturing this advantage for the public good through a decarbonised public transport infrastructure.
Telecommunications groups MTN and Vodacom, facing crippling diesel costs during load-shedding, have rapidly deployed solar and battery systems at thousands of base stations, sharply cutting fuel consumption and insulating core operations from oil price shocks. Similarly, AB InBev (SAB/Miller) has installed solar generation at multiple South African plants, citing energy cost predictability as a key driver rather than climate credentials alone. These actions have now helped put these businesses ahead of the fuel hike curve.
Having said this, small businesses, commuters and low income households remain fully exposed to fuel-driven inflation. Every time the oil price rises, the competitive advantage of these operators widens — while we are dragging our feet on building the sort of resilient renewable infrastructure that would shield us from such shocks.
Windfall profits, captured at the pump
One South African producer is unambiguously benefiting from the current chaos: Sasol. The energy and chemicals giant, whose Secunda facility converts coal into liquid fuels, has seen its share price surge more than 80% since the start of the year. The reason is straightforward: Sasol’s cost of production at Secunda is estimated at about $50 per barrel. With oil trading above $100, every barrel sold captures a massive windfall profit, not through innovation, but simply because a war has broken out on the other side of the world.
Secunda’s emissions-intense fuel production in no way insulates South Africa from the price shock. The same thing would happen with any new domestic oil and gas production, regardless of how much ends up on local forecourts.
Every electric delivery fleet charged from rooftop solar, every business that takes control of its own power costs, and every gigawatt of wind and solar added to the grid in place of gas, is a step toward genuine insulation from the volatility of global oil markets.
The overlooked risk layer: physical, regulatory and systemic exposure
Beyond price volatility, doubling down on oil and gas exposes South Africa to an expanding set of nonprice risks that domestic drilling cannot resolve. Fossil fuel supply chains are physically fragile, as the most recent conflict shows, particularly because South Africa imports most of its refined fuel and holds limited strategic reserves.
At the same time, regulatory risk is rising sharply. The South African Reserve Bank has warned that international climate policies pose risks to financial stability, trade competitiveness and the banking sector if South Africa remains locked into high-carbon energy pathways.
There is a parallel reputational and financing risk. International investors increasingly screen South African assets through an environmental, social & governance (ESG) lens, raising the cost of capital for oil and gas projects and tightening sovereign risk perceptions.
Together, these forces create systemic macroeconomic risk: fossil fuel dependence amplifies inflation, fiscal stress and financial instability in import-dependent emerging economies like South Africa, rather than delivering genuine energy security. Expanding local fossil fuel production does not reduce national risk; it concentrates it.
The real path to energy security
The minister is right that energy security matters, and right that over-dependence on imported fuels is a vulnerability. But the logical conclusion of that analysis is not to hunt for more of the commodity causing the crisis. Rather, it is to accelerate the transition away from it. Every electric delivery fleet charged from rooftop solar, every business that takes control of its own power costs, and every gigawatt of wind and solar added to the grid in place of gas, is a step toward genuine insulation from the volatility of global oil markets.
The current crisis makes the case for that transition with more force than any policy document could. What is needed is a government willing to follow the evidence rather than the geology.
- Reeler is senior technical specialist: climate action, and Pillay executive head of business development & marketing, at WWF South Africa.
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