Paving the Way Forward: How economic reforms are tackling SA's diesel burden

 A R45-billion shockwave swept through the South African economy during the second quarter of the year, driven primarily by a current structural over-reliance on diesel, according to analysis by the Bureau for Economic Research (BER) at Stellenbosch University.

But government’s current structural reforms look set to reduce this dependence over time, says BER Chief Economist Lisette IJssel de Schepper. 

BER’s analysis points to a current systemic vulnerability within South African supply chains. Unlike petrol, which directly impacts consumer pockets at the pump, nearly 70% of the additional cost burden stems from diesel. Because diesel drives heavy industry, freight logistics, mining, agriculture, and food distribution, these elevated operational costs are feeding directly into broader inflation, suppressing overall economic activity.

Decades of deteriorating rail infrastructure, local refinery closures, and sustained periods of load-shedding have exacerbated the country’s diesel dependency. 

IJssel de Schepper says the path forward lies in accelerating domestic structural reforms already underway—particularly around stabilising the national grid and rebuilding the rail network—which are entirely within local control.

"The more important lesson, in my view, is that South Africa's vulnerability to oil shocks has changed over time," IJssel de Schepper told Cape Chamber in response to queries. "We have always been exposed to higher crude oil prices, but years of deteriorating rail infrastructure, refinery closures and severe load-shedding have increased the economy's dependence on diesel. More freight has shifted onto roads, businesses have relied heavily on generators and Eskom's diesel-fired open-cycle gas turbines became a critical part of keeping the lights on during the worst years of load-shedding - although fortunately significantly less so today. This means that the long-term policy response is less about fuel prices themselves and more about reducing structural diesel dependence." 

“Improving rail performance, ensuring a reliable electricity supply, strengthening local infrastructure and creating conditions for investment would all make the economy more resilient to future external shocks.

“The encouraging aspect is that many of these factors are within South Africa's control. We cannot influence geopolitical developments in the Middle East or global oil prices, but we can influence how vulnerable the economy is when those shocks occur,” she said.