Huge fuel increases to hit as oil recovers, says AA
Crude oil prices used to calculate SA’s fuel prices have fallen in lockstep with the reduction in demand, but are now edging higher
Motorists are about to be hit with more fuel price hikes, with the AA forecasting that petrol will increase by about R1.73 a litre, diesel by R1.74 and illuminating paraffin by a huge R2.14 next week.
The association attributes this to the rise in international oil prices, with Brent crude doubling in price since the beginning of May.
The rebound in international oil prices has been as remarkable as the fall earlier in the year. Following record fuel price drops in April and May, when the value of crude oil plummeted, the fuel price increased in June, just as Covid-19 lockdown conditions eased and more motorists took to the roads.
The association noted that crude oil prices used to calculate SA's fuel prices had fallen in lockstep with the reduction in demand, but were now inching up as economic activity begins to ramp up on a global scale.
“The basic fuel price for petrol and diesel in SA jumped from about R3 a litre on May 1 to nearly R6 a litre by June 25,” the AA said.
“This will be an especially huge blow to citizens who use paraffin for cooking, lighting, and especially heating during winter,” it noted.
The AA said that the rand had gained about 34c against the dollar during June, but that the local currency was still about R2.50 weaker to the dollar than before the Covid-19 crisis hit and the country's sovereign debt rating was downgraded.
“We cannot overstate the effect that the rand’s collapse is currently having on fuel users: if the rand had remained at its pre-Covid-19 levels, fuel users would likely be seeing a reduction in fuel prices in the order of 75c a litre in July,” the AA says.
Fuel prices are adjusted on the first Wednesday of every month. The inland price of 95 unleaded petrol increased from R12.22 to R13.40 per litre at the beginning of June, and will rise to R15.13 on July 1 with the latest increase predicted by the AA.
The inland wholesale price of diesel would rise from R11.40 to R13.14 a litre.