Fuel price likely to be close to R20 by Christmas

CAPE TOWN - A perfect storm of demand imbalances, refinery costs, natural gas price hikes and Rand weakness would see the petrol price close in on R20 a litre in the run-up to Christmas, the Automobile Association (AA) said.

This as Mineral Resources and Energy Minister Gwede Mantashe announced the adjustment of fuel prices with effect from Wednesday.

Diesel will be up by R1.48 a litre, illuminating paraffin is set to increase by R1.45 a litre, and petrol will rise by R1.21 a litre for an inland price at the pumps of R19.54 for a litre of ULP95.

The price of 95ULP in Polokwane is already testing the R20/l mark, with fuel there now priced at R19.97/l, the AA said.

The AA said it will continue to push for answers on how the levies incorporated into the fuel price are being allocated and managed.

“The fuel price has a direct bearing on an already weak economy as it continues to drive up inflation on essential consumer goods and affects every South African. All the elements that comprise the fuel must be fully interrogated to determine if they are necessary. Given that the fuel prices are now at record highs, such a review is overdue,” the AA said.

ULP95 in Gauteng is now 39.47% more expensive than 11 months ago, while the coastal price is just over 40% more expensive. Diesel, a major input cost in the manufacturing, agricultural and freight and transport sectors, is 30% more expensive than at the beginning of the year.

The AA added that it was concerned about the alleged delayed announcement of the price hikes, in a statement they said was headlined: "For Release On 28 October 2021" but issued just as the polls closed.

The department said the main reasons for the fuel price adjustments are due to the average Brent Crude oil price having increased from 75.50USD to 83.40USD per barrel during the period under review.

“The Brent Crude oil reached the highest level since October 2018,” the department said.

“The movement in international refined petroleum product prices followed the increasing trend in crude oil prices.”

They also cited the Rand/US Dollar exchange rate and implementation of the Slate Levy as reasons for the increase.

“An increase of 2.20 c/l (from 13.16 c/l to 15.36 c/l) will be implemented into the prices structures of petrol and diesel in line with the Self-Adjusting Slate Mechanism rules effective from November 3, 2021. The combined cumulative Slate balances of petrol and diesel amounted to a negative R1.657 billion at the end of September 2021.”

Cape Times