PLEASE NOTE:

MyNews24 is a user-generated section of News24.com. The stories here come from users.

 
FutureGuide
 
Comments: 19
Article views: 4019
 
 
 

How much of our petrol price actually pays for petrol?

04 March 2014, 10:41

We are all painfully aware that, come Wednesday morning, our petrol prices will be increased by 36c per litre to bring the total price to new record highs – R14.32 for unleaded petrol inland and R13.95 at the coast.

Our collective, and natural, response is to bemoan rising fuel levies. Unfortunately, this month’s 36c increase does not yet include the 20c levy increase announced by the government in the budget speech last week (which will only take effect in April). The queues at pumps this Tuesday will not be the last we see.

The latest increase did, however, get us thinking about where our money is actually going when we fill up. We did a little research and have discovered that between only 53% and 55% of the price we pay for petrol actually pays for the petrol itself. The balance, almost half of the price, goes “elsewhere” - the bulk of it in contributions to tax (namely the fuel levy) and the Road Accident Fund (RAF). This portion alone currently accounts for R3.08 for each litre pumped and will increase to R3.28 from April. 

In March 2009, the price we paid for petrol in Gauteng was R6.88 per litre. On Wednesday that price will increase to R14.32. That represents more than a 100% increase over a five year period, an annual increase of almost 16% per annum and a price rising three times faster than inflation (which was 5.4% over the same period). Unless part of the fortunate few, our incomes would not have grown nearly as fast as that, meaning that we have simply had to find the money for these increases elsewhere in our budgets.

To try and understand where this dramatic price increase has come from, we first looked at the price of Brent crude and the Rand Dollar exchange rate. Five years ago the price of Brent crude was $44.94 per barrel. It is now around $110 per barrel, which represents an annual increase of 19.5%. Taking the Rand Dollar exchange rate into account, the cost of Brent crude has increased by almost 21% per annum over this period. 

This can certainly explain the bulk of the petrol price increases. However, if the actual price of the petrol itself is only around half of the total price we pay, where has the rest of the petrol price increase come from?

The answer lies in the amount that we currently pay for the fuel and RAF levies. It is quite difficult to get a feel for the current cost of these levies in isolation, so we investigated how this cost has changed over the years*. Of course, we would expect this cost to increase broadly in line with inflation. Exactly five years ago, in March 2009, the fuel and RAF levies amounted to R1.73. This means that these levies have increased by almost 80% over the past five years to stand at a soon-to-be R3.28; an annual increase of 12.2% per annum.

To put this in perspective, over the same period, Consumer Price Inflation was 5.4%, as mentioned earlier. Should the fuel and RAF levies have increased at the same rate as inflation, they would amount to R2.26 today, rather than R3.28. In our opinion, this is none other than a stealth tax and unlike the international crude oil price, it is certainly something our government has control over.

When we hear people saying that they are struggling to make ends meet, we do not believe they are simply complaining for the sake of it - it is a reflection of the reality of their situation.  Economists analyse mountains of data to draw conclusions about the financial state of South African households. They look at things like debt ratios, or savings rates, and conclude that people are struggling. But simply look at the queue of cars on a Tuesday night before a petrol hike and you’ll get a feel for people’s finances. Queues have never been this long before; surely a sign of how much people are struggling. 

To add insult to injury, the fuel levy is charged primarily to pay for road maintenance. Given that the income government is drawing from this levy has increased significantly faster than inflation, it would be reasonable to expect equally improving road quality. Instead, we have eTolls and potholes. 

*We relied on our own research to determine the historical fuel and RAF levies. This data is not readily available, but we are confident that the figures are accurate.

FutureGuide is a resource of financial tools you need to make your money work. 
Visit us at
futureguidefinance.com or follow us on Twitter @futureguidefin

Disclaimer: All articles and letters published on MyNews24 have been independently written by members of News24's community. The views of users published on News24 are therefore their own and do not necessarily represent the views of News24. News24 editors also reserve the right to edit or delete any and all comments received.
 

Read News24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
19 comments
Add your comment
Comment 0 characters remaining

Read more from our Users

Crime is still on the rise in SA

Criminals are making our country a slaughterhouse. They do it anytime, they don’t wait for the sun to set. Read more...

1 comments 28 views
Submitted by
Leonard Mulunda
Middle East Crisis, together with...

Dated from long ago, the Middle East crisis needs to come to an end if we all stand unconditionally together as one man against the abuse of Israel on Palestinian territory. Read more...

2 comments 27 views
Submitted by
John Murphy
Rugby

The despised English introduced Rugby in 1858 and it became so popular that in 1902 there was a temporary ceasefire in the Second Boer War so that a game could be played between British and Boer forces. Read more...

6 comments 1384 views
Submitted by
NomfundoMlaba
Dark side of a rainbow nation

As a privileged born free of South Africa, I am deeply agonised to see how much we as the privileged youth don’t appreciate the simple things in life. Read more...

15 comments 2032 views
Submitted by
Matjila Alejandro
Amplats’ cowardice should not be ...

I urge the powers-that-be to hurry and table legislation that would make what Amplats is doing illegal soon and to force other players to respect the workers’ right to strike and to fair bargaining. Read more...

23 comments 602 views
Submitted by
Reflect 014
Treachery part 4 - Ideology – the...

The author of pawns asserts that whichever side wins out, the internationalists of either persuasion will call for a world government as the only solution to handling humanities problems. Read more...

15 comments 249 views

Jobs in Cape Town [change area]

Property [change area]

Travel - Look, Book, Go!

Magical Massinga

Spend 5 nights at the gorgeous Massinga Beach Lodge in Mozambique and only pay for 4 from R13 220 per person sharing. Includes return flights, accommodation, transfers and romantic turndown. Book now!

Kalahari.com - shop online today

2 TV Series for R250

Get 2 TV Series box sets for R250 and save up to R148! Offer valid while stocks last. Shop now!

Mind blowing deals on beauty & fragrances

Save up to 30% off beauty and fragrances. Offer valid while stocks last. Shop now!

Up to 50% off hair care products!

Save up to 50% on professional hair care products at kalahari.com. Offer valid while stocks last. Shop now!

30% off academic books

Score a mind blowing 30% off academic books! Offer valid while stocks last. Shop now!

Mind blowing deals on electronics!

Save up to 35% on electronics. Offer valid while stocks last. Shop now!

OLX Free Classifieds [change area]

Samsung Galaxy s4

Mobile, Cell Phones in South Africa, Western Cape, Cape Town. Date October 24

Best bargain in big bay

Real Estate, Houses - Apartments for Sale in South Africa, Western Cape, Cape Town. Date October 25

VW Golf 6, 1.6 Trendline (Excellent condition)

Vehicles, Cars in South Africa, Western Cape, Cape Town. Date October 25

 

services

E-mail Alerts The latest headlines in your inbox

RSS feeds News delivered really simply.

Mobile News24 on your mobile or PDA

E-mail Newsletters You choose what you want

News24 on your iPhone Get News24 headlines on your iPhone.

SMS Alerts Get breaking news stories via SMS.

Blogs Your opinion on you, me and everyone.

Calais Website keywords automated by OpenCalais.

 
Interactive Advertising Bureau
 
© 2014 24.com. All rights reserved.
There are new stories on the homepage. Click here to see them.
 
English
Afrikaans
isiZulu

Hello 

Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.


Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Settings

Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.








Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.