Another fuel hike awaits motorists in October

South Africans should brace for more fuel price pain in October based on unaudited data from the Central Energy Fund (CEF), says the Automobile Association (AA).

The AA says the current data is indicating an increase to petrol of about R1.20/l and an increase to the wholesale price of diesel by as much as R2/l. Illuminating paraffin is also set for another increase with the data showing an under recovery of R1.84/l.

“Should these significant increases materialise they will push fuel prices to levels last seen in July last year, stretching the personal finances of South Africans even further. Higher fuel prices will invariably lead to higher prices at the till, which will be a blow to many who are already experiencing financial distress,” says the AA.

According to the CEF’s data the main driver behind the potential increases are higher international oil prices, which have climbed substantially since August, mainly on the back of reduced output by major oil-producing nations.

In the case of petrol, as much as 80% of the increase can be attributed to higher oil prices, while these prices are responsible for up to 86% of the expected climb in the price of diesel. The weaker rand/US dollar exchange is contributing to the increases, but its impact is minimal compared with that of rising oil prices, says the AA.

At the beginning of September motorists were hit with a R1.71/l increase in the retail price of petrol. The wholesale price of high sulphur 0.05% diesel rose by R2.84/l and low sulphur 0.005% diesel by R2.76/l.

“The outlook is certainly bleak, though it has improved a little since the beginning of the month. With two more weeks before the official adjustment for October is made, South Africans will be hoping the downward trajectory continues. Though increases are now a certainty for October, the question will be by how much fuel prices will ultimately rise,” says the AA.