Petrol hike again in November

2018-10-24 06:01

FURTHER substantial fuel price hikes are lined up for the end of October, according to the Automobile Association (AA), which was commenting on unaudited mid-month fuel price data released by the Central Energy Fund.

“International oil prices remain stubbornly high and it is possible that current tensions involving Saudi Arabia, one of the world’s biggest oil producers, could place more pressure on fuel prices.

“More welcome news is that the rand is working in South African’s favour, and the recent firming of our currency against the U.S. dollar has taken some of the bite out of oil’s rally,” the association said.

However, the potential price hikes are still daunting, especially for diesel users, it said.

Petrol prices are now set for an increase of 40 cents a litre, while diesel and illuminating paraffin could spike by 70 cents and 65 cents, respectively, the AA said.

It follows a record price increase in October which saw 93 octane fuel go up by 99 cents per litre, while 95 octane climbed by a rand at the pumps. Diesel went up by R1,24 per litre.

The association said the predicted increase to the price of petrol must, for the moment, be seen against the backdrop of the Department of Energy’s (DoE) proposal to set a maximum price for the sale of 93 octane ULP and LRP fuels.

“Should this happen, it will allow fuel retailers to set their own prices below the maximum amount indicated by government, and may, depending on the margins, ease the burden on users of the two identified fuels.

“It must be stressed, however, that we did not participate in the drafting of the proposal, so details on its possible implementation remain unclear to us,” the AA said.

The AA said it welcomes government’s efforts on the issue of rising fuel prices, and that the DoE has requested input from industry stakeholders. It said that the proposal looks to be consumer-friendly, and that the details will clarify how this will work once all the feedback is received.

The AA stressed the country cannot continue to be hammered by large fuel price hikes without severe economic knock-on effects.

“The effect on bus and taxi operations could lead to fare hikes which exceed commuters’ ability to pay.

“We again call on the government to prioritise economic policies which inspire investor confidence.

A stronger and more stable rand is the country’s only defence against the vagaries of the international oil price,” the AA said.

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