South Africans must expect another substantial petrol price increase later this month‚ the Automobile Association predicts.
Commenting on unaudited mid-month fuel price data released by the Central Energy Fund‚ the AA said: “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 Africa’s favour‚ and the recent firming of our currency against the US dollar has taken some of the bite out of oil’s rally.”
“However‚ the potential price hikes are still daunting‚ especially for diesel users.”
Petrol prices are currently set for a 40 cents-a-litre increase‚ while diesel and illuminating paraffin could spike by 70 cents and 65 cents respectively‚ said the AA.
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 commented.
However‚ the association said it welcomed government’s efforts to tackle rising fuel prices‚ and that the Department of Energy had requested input from industry stakeholders. It said the proposal looked to be consumer-friendly‚ and that the detail would clarify how this would work once all the feedback was received.
The AA said the country could not continue to be hammered by large fuel price hikes without severe economic knock-on effects. Earlier this month the price of unleaded 93 petrol increased by 99c‚ unleaded 95 by R1 and diesel by R1.24.
“The effect on bus and taxi operations could lead to fare hikes which exceed commuters’ ability to pay‚” the Association noted.
“We again call on 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.”