Brace for fuel price increases, says AA
Petrol and diesel are to rise again in June after record reductions in the past two months
SA motorists must brace for a bigger-than-expected petrol price increase in June after oil prices rebounded off their late-April crash.
This was after record fuel price drops in April and May. According to the AA, the price of 93 unleaded petrol will rise about R1.03/l at the beginning of June, with 95 unleaded to increase about R1.13.
Further bad news is that diesel — of which there is currently a shortage in the country — is expected to go up by about 13c/l after data from the Central Energy Fund initially predicted a 56c reduction. Last week, the data predicted an increase of 50c/l for petrol in the first week of June, while diesel was headed in the opposite direction.
Since then the price of Brent crude oil has risen from $29 to $36, leading to all-round bad news for motorists. “In a dramatic reversal of last month’s oil swings, international product prices used to calculate SA’s basic fuel price have nearly doubled since their lows at the end of April,” the AA said.
Over the same period, the rand has settled in at about R17.40/$, about R3 weaker than three months ago before the Covid-19 pandemic and multiple downgrades of the economy by ratings agencies, said the AA.
Despite this, the AA said SA motorists now have some unusual capacity to absorb fuel price increases, with most grades of fuel still more than R3/l cheaper than at the start of 2020. Many motorists are also driving far less due to the coronavirus lockdown.
“Our concern, of course, is that the financial situation of many South Africans has changed for the worse in the past two months, with huge job losses and talks of across-the-board salary cuts. This could make South Africans sensitive to even small fuel price increases.”
The inland price of 93 unleaded petrol is currently R12.02/l, with 95 unleaded priced at R12.22. The wholesale price of 50ppm diesel is R11.19/l.
On Tuesday, the SA Petroleum Industry Association (Sapia) said there is inadequate stock of diesel in the country due to an unexpectedly high demand after lockdown conditions were relaxed.
“Since the easing of lockdown restrictions and the transition from alert level 5 to level 4, the opening of the economy has resulted in a more rapid recovery than expected. There has been a dramatic increase in demand for diesel,” a Sapia statement said.
“Stock rationing is being implemented to manage demand and to preserve stock. Unplanned shutdowns were a contributing factor that led to this and the shortage. It is likely to continue until the end of May.”
More than half SA’s refining capacity was shut amid the lockdown, which started on March 27, that restricted activity to essential services and curbed demand. Those rules were eased and some industries were allowed to start operations in May.
Sapia said that both refineries in Durban are starting up and on-spec production is expected by month-end, diesel supply will then normalise.