AA renews call for fuel-price review after hikes

The AA has renewed its call for a review of the fuel price structure after record-breaking price hikes to petrol, diesel and illuminating paraffin on Wednesday.

Both grades of petrol increased by 75c to bring the retail price of 95 unleaded to R20.29/l and 93 unleaded to 20.07/l in Gauteng — the first time the petrol price breached R20/l.

These are new record highs in a year that has seen a series of fuel price hikes, and it now costs R1,017.50 to fill a 50l tank compared with R743 in January when a litre of 95 unleaded was priced at R14.86.

On Wednesday the wholesale price of diesel rose 73c/l for high-sulphur fuel and 75c/l for low-sulphur diesel, while illuminating paraffin went up 42.20c/l.

Diesel now costs R17.92/l (high-sulphur) and R17.98/l (low-sulphur).

The price of oil played almost no part in the latest hikes and points to the need for an urgent investigation and recalculation of the current fuel pricing model, says the AA.

"This price disaster is entirely home grown. Internationally, oil prices have pulled back from their recent highs and Brent Crude is now trading about $75 a barrel. The majority of this month's underrecovery is because of the weakening of the rand against the US dollar,” the association notes.

It says the burden on consumers could be reduced by reducing fuel taxes which make up more than half of each litre of 95 octane petrol, 126% higher than a decade ago.

The two main taxes paid on every litre of fuel are the General Fuel Levy (GFL) and Road Accident Fund (RAF) levy, together comprising about 30% of the price. It leads to petrol and diesel being cheaper in neighbouring countries who buy fuel from SA but don’t add such heavy taxes.

The fuel price is additionally made up of transport costs (from the harbour to inland areas, which accounts for the difference in price between coastal and inland prices), custom and excise duties, retail margins paid to fuel station owners and secondary storage costs.

“The increases year on year since December 2020 are astronomical. Petrol has increased by more than 40%, diesel by about 44%, and illuminating paraffin by more than 70%,” says the AA.

“These increases are severe and will undoubtedly have major negative implications on already financially constrained consumers. These huge increases, we believe, strengthen our call for a review of the fuel price structure, and for a recalculation of all the elements that comprise the fuel price.”