Big fuel price hikes announced for Wednesday

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The petrol price will be hiked by 81c a litre on Wednesday, while diesel will go up by between 72.5c a litre (0.05% sulphur) and 74.5c (0.005% sulphur), the department of mineral resources and energy announced.

The latest price hike will push the price of petrol - currently around R19.50 a litre - to above R20 in Gauteng and other inland provinces.

At the start of November, petrol prices were hiked by R1.21, while diesel increased by R1.48.

Illuminating paraffin will go up by 42.2c/l, while the maximum LPGas retail price will be increased by 183.00c/kg from 1 December.

Local fuel prices are determined by international oil prices - as well as the dollar-rand value, as South Africa buys oil in dollar.

The latest fuel price hikes are due in large part to a sharp fall in the rand against the dollar, which averaged at R15.85/$ over the past month, compared to R14.72 the previous month.

The average oil price also increased from $82.50 a barrel to $83.

"The key driver [of the higher oil price] is the higher global demand recovery amid a weaker supply response from non-OPEC and other oil producers,” the department said in a statement. “There is a mismatch between demand and supply, i.e., there is more demand for oil products than the market can supply. The US and other major oil consumers are coordinating efforts to try to lower high prices by releasing oil from their inventory stocks, while OPEC and non-OPEC members are refusing to increase oil production to match the global recovery demand."

The release of millions of barrels of strategic oil reserves by the US government has done little to dampen the oil prices, it noted. 

Also contributing to the higher fuel prices is a net increase of 17.84 c/l in the annual margin adjustments on petrol and a net increase of 8.20 cents per litre on diesel and illuminating paraffin wholesale prices, with effect from 1 December.

The so-called Slate levy will also be hiked from 15.36 c/l to 41.66 c/l on Wednesday. The levy is paid to fuel companies to compensate them for imbalances that build up over time due to the way that the basic fuel price is calculated. 

The latest fuel price hike comes ahead of South Africa’s key travel season.

"It is important to appreciate that fuel prices are soaring worldwide due to persistently high crude oil prices," the department said. "Record pump prices have been experienced in many other countries."

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