South Africans can expect record fuel price increases in April, delivering yet another blow to already embattled consumers.
Commenting on mid-month fuel data released by the Central Energy Fund (CEF), the Automobile Association (AA) projects fuel prices of around R24/l for petrol and R23.60 for diesel.
Based on the current data, 95 octane petrol is set to increase by R2.15/l, 93 octane is expected to climb by R2.07/l, diesel by between R2.94/l and R3.08/l and illuminating paraffin by R2.51/l.
“If realised at month end, these will be the biggest increases to fuel prices in SA’s history and will, undoubtedly, have major ramifications for all consumers and the economy in general. We must note, though, that this is the mid-month outlook, and oil prices are, for the moment, see-sawing significantly so there may yet be some relief before the official adjustment by the department of mineral resources and energy is made going into April,” says the AA.
Fuel prices hit record highs in March, with petrol costing more than R21 a litre for the first time
The main driver behind the increases is the movement in international oil prices, which have soared to record levels in recent weeks because of the wart in Ukraine and concerns over Russian oil supplies. Russia is the third-highest producer of crude oil and supply worries are being seen in increased oil prices.
The increase to oil prices is contributing 98% to the predicted price hikes, with the rand — which stabilised at about R15.11 to the dollar — contributing the other 2%. Effectively, though, the rand’s value against the US dollar is having a nominal effect on the price of fuel locally.
“We are seeing record fuel prices around the world as the high oil prices exact their toll in every market. Locally there is little to cushion the blow for millions of South Africans who are struggling to cope with a fragile economy that is hurting their personal financial situation. Consumers should brace themselves and prepare for what is likely to be a long winter if the conflict in Ukraine is drawn out,” the AA says.
The government is considering measures to shield consumers from potentially dramatic price hikes. Minerals and energy minister Gwede Mantashe and finance minister Enoch Godongwana are discussing ways to reduce the fuel price, for instance by suspending the taxes and fuel levy that make up 30% of the pump price of petrol.
Other options under discussion are to remove the demand side management levy of 10c/l on 95 octane unleaded petrol; introduce a price cap on unleaded 93 octane; or make part of the state’s strategic oil stock available to local refineries.
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