Petrol pain to continue for motorists despite oil lifeline


South Africans have been thrown a lifeline by declining oil prices in June, but not enough to avert another hike in fuel prices, the Automobile Association cautioned on Thursday.

Commenting on unaudited month-end fuel price data released by the Central Energy Fund, the AA said that without oil's decline, the fuel price hike for July would have been far higher.

According to the AA, the average rand/US dollar exchange rate used to calculate the basic fuel price has slipped in a virtually straight line since the start of June.

"The month began with the rand at around R12.65 to the dollar, but the average currently stands at nearly R13.30. Fortunately, international oil prices have retreated at a similar rate, resulting in a fairly moderate fuel price increase outlook for July."

Global oil prices and the rand/dollar exchange rate are the two primary factors which influence local fuel prices on a monthly basis.

The AA said it expected the pump price of petrol and diesel respectively to rise by around 26 cents and 24 cents a litre, while illuminating paraffin is set to cost 20c more per litre.

But the AA warns that any uptick in oil prices could have serious implications for South Africans if the rand continues to slide.

"If oil had remained flat in June instead of declining, price increases of 40 cents a litre would have been likely for July. And if it had followed its upward path of May, the increase would have been nearly 80 cents."

If this expected increase materialises when the Department of Energy makes the formal fuel adjustment announcement on Friday, 95 octane fuel inland is set to breach the R16 a litre mark, while 93 octane fuel inland will touch on R15.80 a litre. Coastal prices for petrol will hover around R15.30 a litre.  

Given the increased cost of fuel in South Africa, the AA again urges government to reconsider the high cost of the added taxes which account for up to one third of the petrol price. Currently R5.30 of every litre of petrol is paid towards the General Fuel Levy and the Road Accident Fund Levy.

The Association advised motorists that it could foresee further fuel price hikes, driven by South Africa's weak economic position and potential fallout from trade tariff disagreements between the USA and other nations.

"Combined with lower wage hikes and the increasing cost of living, the expenses of commuting by private car might spiral beyond many motorists' reach. Commuters who would never previously have considered public transport or carpooling may soon have no option," the AA said.

SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24
Rand - Dollar
Rand - Pound
Rand - Euro
Rand - Aus dollar
Rand - Yen
Brent Crude
Top 40
All Share
Resource 10
Industrial 25
Financial 15
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot