The price of petrol at the pump is set to rise by 74 cents a litre from 6 March.
The wholesale diesel price to rise by 91 cents a litre.
The Energy Department’s Robert Maake explains why prices are being increased.
“The main reason for this big increase is mainly the crude oil price. It was much higher during the current review period compared to the previous period. The Brent crude oil was around $34 per barrel while in the previous period it was around $16 per barrel.”
The Automobile Association’s Layton Beard says consumers will be hit hard in the coming months.
“The general fuel levy and the Road Accident Fund levy will be added to the fuel price in April. That is apart from what adjustment is made to the basic fuel price. And obviously, in June, there’s the addition of the carbon tax we have to wait and see on a day-to-day basis how those numbers pan out.”
This is the second consecutive increase in fuel price this year.
Following a fuel price roller coaster in 2018, in which prices finally subsided meaningfully towards the end of the year, South African motorists can look forward to some price stability, at least for the next month.
According to the Automobile Association, the price of petrol is likely to increase by around eight cents a litre, while diesel is set to go down by three cents and illuminating petrol by nine cents. This prediction is based on late-month, unaudited data released by the Central Energy Fund.
This would push the price of a litre of 95 Unleaded petrol to R13.50 at the coast and R14.09 in Gauteng, with 93 Unleaded rising to R13.87 in the latter region.
While the rand has gradually appreciated against the US dollar in the past month, firming from around R14.50 to the dollar to current levels in the region of around R13.70, international crude oil prices edged higher, to hover around the $60 mark, although this is still well below the highs of around $84 recorded in October.
“What is worth noting is that the average rand strength against the US dollar has been increasing for nearly a month, and we are hopeful this may point to a period of greater stability for the currency,” the AA added.
“If international oil prices continue their current stable trend, South African fuel users may see fewer of the wild swings in fuel prices which characterised 2018.”
But don’t spend all those savings just yet. Last year showed us how volatile the fuel market can get.
By Tom Head for The South African
Has Santa Clause been listening to the South African public? A petrol price decrease of epic proportions is now certifiably on the cards for December, after the Central Energy Fund (CEF) released a new round of data.
Last week, we broke the news that the petrol price was likely to drop by more than R1.50 per litre. However, that figure may be nearer the R2 mark by the beginning of next month. Business Tech report that the rand’s gains against the dollar have propelled the costs into more affordable territory.
How much will the petrol price drop by?
All figures based on price per litre:
- Petrol 95: R1.67
- Petrol 93: R1.64
- Diesel: R1.14
- Illuminating Paraffin: R1.05
It’s been a hectic couple of months for the crude oil market, but one’s misfortune is another’s gain. The price for a barrel of oil has slumped to the $60 mark, compared with $85 in September. Donald Trump, this tweeter-in-chief, has even suggested oil prices could drop lower than this.
“The main driver of lower prices has been an accelerating decline in international oil prices, which have trended downwards since the beginning of this month,” said the Central Energy Fund in an official statement.
A perfect storm of positive factors for South Africa is leading us towards one of the most dramatic changes in monthly petrol prices ever seen in this country. It would be the ideal remedy to a year that has been infamous for soaring fuel costs, and October’s R1-per-litre increase.
It all makes for a pretty rosy picture heading into the end of 2018. Inland regions, such as Gauteng and Free State, will go from paying over R17 a litre to less than R15.50. Meanwhile, those near the coast will smash the R15 barrier altogether, as prices plummet even further.
What South Africans will pay for petrol in December 2018 – forecast:
- Inland: R15.41
- Coastal regions: R14.82
South Africans must expect another substantial petrol price increase at the beginning of November‚ the Automobile Association (AA) says.
Commenting on unaudited mid-month fuel price data released by the Central Energy Fund‚ the AA said: “International oil prices remain stubbornly high and it is possible that current tensions involving Saudi Arabia‚ one of the world’s biggest oil producers‚ could place more pressure on fuel prices. More welcome news is that the rand is working in SA’s favour‚ and the recent firming of our currency against the dollar has taken some of the bite out of oil’s rally.”
“However‚ the potential price hikes are still daunting‚ especially for diesel users,” the AA said.
Petrol prices are currently set for a 40c a litre increase‚ while diesel and illuminating paraffin could spike 70c and 65c a litre, respectively‚ the AA said.
The association said the predicted increase in the price of petrol must‚ for the moment‚ be seen against the backdrop of the department of energy’s proposal to set a maximum price for the sale of 93 octane unleaded petrol (ULP) and lead-replacement petrol (LRP) fuels.
“Should this happen‚ it will allow fuel retailers to set their own prices below the maximum amount indicated by government‚ and may‚ depending on the margins‚ ease the burden on users of the two identified fuels. It must be stressed‚ however‚ that we did not participate in the drafting of the proposal‚ so details on its possible implementation remain unclear to us‚” the AA commented.
However‚ the association said it welcomed the government’s efforts to tackle rising fuel prices‚ and that the department of energy had requested input from industry stakeholders. It said the proposal looked to be consumer-friendly‚ and that the detail would clarify how this would work once all the feedback was received.
The AA said the country could not continue to be hammered by large fuel price hikes without severe economic knock-on effects. Earlier in October, the price of unleaded 93 petrol increased by 99c a litre‚ unleaded 95 by R1 and diesel by R1.24.
“The effect on bus and taxi operations could lead to fare hikes that exceed commuters’ ability to pay‚” the AA noted. “We again call on government to prioritise economic policies that inspire investor confidence. A stronger and more stable rand is the country’s only defence against the vagaries of the international oil price.”
By Patsy Beangstrom for IOL
Residents can brace themselves for one of the highest fuel price increases as the cost of petrol smashes the R17 a litre mark from Wednesday.
Minister of Energy Jeff Radebe announced the adjustment of fuel prices for October on Monday.
Both grades of petrol, 93 and 95 (ULP & LRP), will increase by 99 cents and 100 cents a litre (c/* ) respectively from midnight on Tuesday night. This brings the overall retail price of 95 ULP for inland motorists to R17.08 c/* and R16.49 c/* at the coast.
The cost of diesel will go up by R1.24 a litre and illuminating paraffin (wholesale) by R1.04 cents a litre, while illuminating paraffin (SMNRP) will jump by R1.39 per litre. The maximum retail price of LP gas will increase by R1.79 per kilogramme.
The Department of Energy (DoE) said in a statement on Monday that South Africa’s fuel prices were adjusted on a monthly basis, informed by international and local factors.
“International factors include the fact that South Africa imports both crude oil and finished products at a price set at the international level, including importation costs, eg shipping costs.”
The department attributed the main reasons for the latest fuel price adjustments to the rand/US dollar exchange rate.
“The rand depreciated, on average, against the US dollar (from 13.90 to 14.90 rand per USD) during the period under review. This led to a higher contribution to the Basic Fuel Prices (BFP) on petrol by about 50.00c/* and diesel and illuminating paraffin by about 52.00c/* .”
A further contributing was the increase in the price of crude oil which went up from 74.25 USD to 78.25 USD per barrel.
“The main contributing factors were the unwillingness by the Organisation of Petroleum Exporting Countries (Opec) to increase their production outputs and negative impact of the hurricanes on petroleum infrastructure in the USA during the period under review. Furthermore, the looming sanctions against Iran oil exports by the USA will put more pressure on the crude oil prices.”
The Automobile Association (AA) on Friday warned that fuel users are facing unprecedented price increases in October that it described as “catastrophic” for road users.
The AA noted that the major culprit is the country’s economic policy which has left South Africans defenceless against upticks in international oil prices.
In September the DoE decided to intervene temporarily to provide some relief against fuel price hikes.
FNB Agric Business warned on Monday that the increase would place a further strain on consumers and hurt consumption growth.
“The South African Reserve Bank (Sarb) earlier indicated that household consumption has already fallen by 1.3% in the second quarter of 2018 as spending on goods declined, particularly durables which were down 11.2%,” Dawie Maree, head of marketing and information at FNB Agric Business, said yesterday.
“Small business and the poorer households will bear the brunt as their transport costs account for a large portion of household expenditure and the consequence of sustained fuel price increases will further erode disposable income and cause financial stress. This will force a change in spending patterns with a cut in spending on luxury items and frequency of visits to eateries.”
Maree stated that locals faced a dim festive season if the current pace of fuel price increases was sustained in the two months ahead.
“At producer level, the impact will be cost pressures as we head into the new planting season for summer crops. The higher crude oil price, which has now breached the US$80/barrel level, is a double whammy due to the direct influence on the fuel price and the indirect influence on oil derivatives such as fertiliser, pesticides and herbicides (agrochemicals) all of which are inputs in crop farming. This will squeeze profit margins if agriculture commodity prices do keep up with the pace of input cost increases.”
By Tom Head for The South African
You might have heard a few horror stories about the petrol price in South Africa soaring by R1 for next month. Well, we’re here to tell you it all seems completely true.
The AA forecast a rise of R1.12 per litre of petrol, and a whopping increase of R1.38 for diesel in October – a devastating blow that has been described as “the biggest single hike” in our country’s history. But what’s fuelling this crisis, and why are costs spiralling so dramatically? We’ve got answers.
Oil prices are nearing $100 a barrel
There’s a very bleak outlook for oil prices on a global scale. This is by no means a consolation, but it goes some way to explaining why it’s getting ridiculous in South Africa. It’s not just internal factors that have ramped up the petrol price. Some commentators believe oil prices will hit a 10-year high of $100 a barrel soon.
Tension between the US and Iran
It’s hard to accept, but the world tends to revolve around America at this point. While President Trump is taking a more hostile approach to foreign policy, Iran has become one of his targets. Now, the country is one of the biggest exporters of oil in the world, but there’s trouble on the horizon.
The US government are set to impose further sanctions on Iran while pulling out of an agreement regarding a nuclear deal achieved by the Obama Administration. Production is already dropping in the Middle-Eastern country, and further financial turmoil will have a negative effect on oil costs.
Countries not producing the goods
Energy Minister Jeff Radebe has highlighted that Libya produced 1.5 million barrels of oil a day before the regime collapsed in 2011. That number is now almost at a third of what it used to be.
Venezuela’s current crisis also got a mention. They are a member of the Organization for Petroleum Exporting Countries (OPEC), but the oil industry has all but collapsed in the South American state. To put it in laymen’s terms, production is down and the cost has gone up.
A weak rand value to the dollar
It’s been a nightmare month for the rand, which has had to battle against the fierce knockout blow delivered by the recession. With the financial crisis coming as something of a surprise, the rand plummeted against the greenback and has struggled to find its feet ever since.
It soared above the R15 mark, and only recently came back down to R14.40. Most recently, Turkey’s currency tanked as a result of Trump’s intense import tariffs, aimed at stimulating industrial growth within the US.
In a global market, for every action, there is a reaction, and all emerging economies felt the knock-on effect of Turkey’s wobble.
Government subsidy backfires
Have you ever tried to help a situation but only gone and made things worse? Well, that’s effectively what happened to Jeff Radebe last month. The minister announced that the government would subsidise fuel costs for the month of September, meaning that an increase in the petrol price was smaller than forecast.
However, what were we just saying about actions and reactions? The slight relief felt this month will be compounded by the misery said to be coming our way next week.
For petrol prices to rise by a rand within a 30-day period is sharp, shocking rise. Had there been no government intervention, there’d be less of a knock-on effect. October’s rise could have been as “little” as 50 cents per litre, had South Africans been allowed to pay the full whack in September.
By Kaunda Selisho for The Citizen
The nation will have to pull those belts a whole lot tighter with a projected increase of about R1.14 a litre of petrol.
There seems to be no end in sight for South Africa’s perpetual rise in fuel prices as the Central Energy Fund (CEF) has predicted yet another increase for the month of October.
The CEF report, released earlier this week, attributes the projected increase to a weaker rand and a higher international oil price.
The most recent hike was capped at 5c after government intervention but was dubbed a “once off” to provide citizens a short reprieve after sustained increases over five months in the lead-up to September.
According to the CEF’s calculations, early indicators estimate that the fuel price could rise by R1.14 a litre in October.
Fin24 calculated that the inland price of 95 octane petrol would rise to a possible record high of above R17 a litre, thus affecting food prices and transport costs.
By Bekezela Phakathi for Business Day
The possibility of reviewing the fuel levies downwards to ease the financial burden on motorists and consumers has not been ruled out, says President Cyril Ramaphosa.
“The fuel levy is part of fiscal architecture we have in our country … we have said we want to look at that … the fuel levy is precisely one of those we are looking at,” Ramaphosa said in parliament on Wednesday
“We are sensitive to the burden imposed on our people.”
The price of fuel recently went up to more than R16 a litre in inland provinces. The hikes are expected to have a ripple effect on the economy.
The price of a litre of petrol in SA has more than doubled in 10 years, while the levies increased from about R1.30 in 2008 to the current R5.30.
The fuel levy contributes close to R63bn annually to the fiscus. The Road Accident Fund levy accounts for R1.93 of the fuel price. Taxis and other public transport operators have already upped their fares in response to the increases.
Ramaphosa said any decision would have to weigh the advantages of reducing the fuel levy against the loss of revenue for the state, which will have an effect “on a whole lot of things”.
“It’s not as easy as snapping a finger and coming up with an answer … it’s one of those issues we continue to look at and seek solutions for.… We import a commodity we have no control of in terms of prices,” said Ramaphosa, during a question-and-answer session.
DA leader Mmusi Maimane had asked Ramaphosa whether there was a plan to reduce the fuel levy, which he called a “corruption tax”. “The RAF [Road Accident Fund] is declaring losses and money is being wasted. Is there a plan to reduce the fuel levy?” he asked.
Department of energy officials told parliament on Tuesday that any adjustment to the fuel levy could only take place in the next financial year.
The government has said before there is nothing much it can do to stem the fuel increases since the country imports the bulk of its requirements. The change in the price of petrol is typically a function of both changes in international exchange rates, particularly the US dollar-rand exchange rate, and the change in international crude oil prices.
Ramaphosa also answered questions on the unemployment crisis and the burning issue of land expropriation without compensation.
“Since 2009 I have heard about plans and summits, yet millions of South Africans are still unemployed,” said Maimane. “The definition of insanity is doing the same thing and expecting a different outcome or keeping the same people [in the cabinet] and expecting a different outcome.… Can we bring change so we can expect a different economic trajectory?”
Ramaphosa said the cabinet would soon announce details to stimulate economic growth, including finalising the Mining Charter and allocation of broadband spectrum.
“We want to unlock the levers that hold the economy back,” said Ramaphosa.
The president hit back at Maimane, saying: “I’ve not heard anything wise that you’ve said.… You are playing the people or the man, not the substantive issues that have to do with economic growth.”
Without land redistribution there would be no stability in the country, Ramaphosa said.
“Transformation means we must have redistribution of land because there was an injustice committed many years ago.… If you do not want stability then do not transform … but if you want stability then you must transform.… We will make sure that our country succeeds. Even the landowners must embrace this process,” he said.
By James de Villiers for Business Insider SA
The price of a litre of petrol in South Africa increased from R6.92 in July 2008 to R15.53 in July 2018 at the coast, and from R7.16 to R16.02 inland – nearly tripling in the last decade.
Over the same period, the tax (or fuel levy) on a litre of petrol increased from a low of R1.27 in July 2008 to R3.37 in July 2018.
This means the tax on fuel increased by 165.35% in 10 years.
On Sunday, the department of energy announced that a litre of unleaded petrol will increase by 26c, pushing the price of a litre past R16 in the inland for the first time.
Energy Minister Jeff Radebe ascribed the increasing petrol price to the rand’s poor performance to the US dollar.
Radebe said the increase would have been 20c more if it wasn’t for declining oil prices.
By Jay Caboz for Business Insider SA
After last night’s increase, a litre of petrol will cost twice as much as a litre of Coke. These favourite local SA items will cost the same as – or more than – a litre of petrol will tonight.
After tonight’s price increase South Africans will be paying almost R16 per litre for petrol. In Gauteng one can expect to pay R15.79 per litre while coastal cities will pay R15.20 per litre, according to the Central Energy Fund.
The recent fuel hikes have been taxing on South African motorists who will now be forking out even more following May’s 49c per litre increase.
Business Insider South Africa visited shopping stores to see how this compared to some of South Africa’s daily items on the isles.
These favourite local SA items will cost almost the same as a litre of petrol will tonight:
- A litre of Clover Long Life Full Cream Milk – R15.99.
- A 300ml bottle of drinking yogurt (R15.08) or a 500g tub of plain low fat yogurt (R15.99).
- A 2-litre bottle of Coca-Cola – R15.99.
- A 5-litre bottle of water – R16.99.
- 750ml of No Name Cooking Oil – R15.99
- A 250ml can of Red Bull Energy Drink go for R14.99.
- A 350ml refill of Sunlight dish washing liquid.
- A six pack of hotdog rolls from Pick n Pay – R14.99.
- A kilogram of rice – R15.99.
- For the sweet tooth you can get a packet of marshmallows (R15.49), a small packet of Cadbury Tumblers Raisins (R16.13), or a 85g packet of microwave popcorn (R16.49).