Fuel price cut may be on the cards next week

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After a painful year at the fuel pumps, South Africans may finally get a break next week.

According to data from the Central Energy Fund, leaked to Netwerk24, petrol and diesel prices currently look set for cuts of between 73c and 76c per litre, depending on the grade of fuel.

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

While the Brent oil price rose over the past month, Netwerk24 reports that there has been a decline in the prices for various oil imports that reached South Africa in recent weeks. This has counteracted a soft rand.

The rand has weakened from R15.39$ to R15.74 over the past month.

The price of 95 petrol in Gauteng rose by 37% - from R14.86/l to R20.29 - since January.

This was mainly due to rocketing oil prices.

In 2021, the price of oil saw its biggest annual gain in more than a decade, Bloomberg reported. This was thanks to accelerating economic growth and fuel demand, as lockdowns were downgraded across the world.

"Additionally, surging natural gas prices spurred greater demand for oil-derived products while OPEC+ continues to only drip-feed additional supplies onto the market," Bloomberg reported. Goldman Sachs forecasts further gains in oil prices in 2022. 

Petrol and diesel prices will be adjusted on Wednesday next week, and an announcement on price changes is expected soon. 

New lack of transparency in SA fuel prices

Last month, the department of mineral resources and energy (DMRE) made a mistake in its calculation of the petrol price hike. Instead of an 81c increase, as announced, petrol was only supposed to go up by 75c. The department added an adjustment of wages for service station workers, which came to 6c a litre, twice - it was already implemented in September 2021. The error was corrected within hours, but some motorists still ended up paying more than they should have. 

"The error by the DMRE validates the AA’s call that a total review of the fuel price, and an audit of all the process and components which comprise the fuel price, is necessary," the Automobile Association said in response to the mistake.

This came amid unhappiness about the fact that the CEF stopped publishing daily forecasts of fuel price movements. 

The AA says the fact that daily fuel price updates are being withheld from the public – and that only the monthly adjustment is now being released, means there is no transparency in the process of fuel price determination.

"In the past the daily updates provided some indication of fuel price movements to the public, but that is no longer the case. This, combined with this error by the DMRE (which was not identified by any one of the many people who should review this adjustment before the Minister’s official announcement), supports our view that a review of the fuel price is long overdue," said the AA.

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