The impact of fuel price on the cost of public transport in South Africa
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Date
2025-05
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University of Fort Hare
Abstract
This study investigates the impact of fuel prices on public transport costs in South Africa from 1994 to 2022. With 80% of the population relying on public transport and over 80,000 buses transporting 850 million people annually, rising fuel prices significantly affect operational costs, often leading to fare hikes. This study investigates the long-term determinants of the cost of public transport (CPT) in South Africa, utilizing an Autoregressive Distributed Lag (ARDL) model for time series analysis over the period from 1993 to 2022. The results from the ARDL (4, 4, 4, 4, 4) model indicate a significant long-run relationship between fuel prices (FP), inflation (INF), GDP (LGDP), income levels (LINC), and the cost of public transport (CPT). Specifically, the coefficient for fuel prices (FP) is 0.0178, indicating that a R1.00 increase in fuel prices leads to a R0.0178 increase in the cost of public transport, reflecting the direct impact of fuel price fluctuations on transport costs. Similarly, inflation (INF) shows a positive relationship with CPT, with a coefficient of 0.0654, suggesting that a rise in inflation contributes to higher transport costs. The coefficient for GDP (LGDP) is 4.9516, implying that higher levels of economic output are associated with an increase in public transport costs, possibly due to rising demand and operational costs in a growing economy. On the other hand, income levels (LINC) exhibit a negative relationship with CPT, with a coefficient of -6.0052, indicating that higher income levels reduce the cost of public transport, which is likely due to increased demand for more efficient services. These findings suggest that public transport costs in South Africa are influenced by a mix of macroeconomic variables, with fuel prices and inflation being the most significant drivers. The study underscores the need for policy interventions to manage fuel price volatility and mitigate its effects on public transport affordability. The study also explores mitigation strategies like government subsidies and alternative energy sources to stabilize public transport costs. Results show a significant positive impact of fuel prices, inflation, and GDP on transport costs.
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Keywords
Gasoline -- Prices, Gasoline industry, Gasoline -- Prices -- Economic aspects, Transportation -- South Africa